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AUTHENTICATED 
US. GOVERNMENT 
INFORMATION ^ 


CONTINUED OVERSIGHT OF THE CALIFORNIA 
HIGH-SPEED RAIL PROJECT 


( 114 - 50 ) 

FIELD HEARING 

BEFORE THE 

SUBCOMMITTEE ON 
RiULROADS, PIPELINES, AND 
HAZARDOUS MATERIALS 

OF THE 

COMMITTEE ON 
TRANSPORTATION AND 
INFRASTRUCTURE 
HOUSE OF REPRESENTATI\H]S 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 


AUGUST 29, 2016 (San Francisco, California) 


Printed for the use of the 
Committee on Transportation and Infrastructure 



Available online at: http://www.gpo.gov/fdsys/browse/ 
committee. action?chamber=house&committee=transportation 


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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 


BILL SHUSTER, 

DON YOUNG, Alaska 

JOHN J. DUNCAN, Jk., Tennessee, 

Vice Chair 

JOHN L. MICA, Florida 

FRANK A. LoBIONDO, New Jersey 

SAM GRAVES, Missouri 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ERIC A. “RICK” CRAWFORD, Arkansas 

LOU BARLETTA, Pennsylvania 

BLAKE FARENTHOLD, Texas 

BOB GIBBS, Ohio 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

JEFF DENHAM, California 

REID J. RIBBLE, Wisconsin 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

SCOTT PERRY, Pennsylvania 

RODNEY DAVIS, Illinois 

MARK SANFORD, South Carolina 

ROB WOODALL, Georgia 

TODD ROKITA, Indiana 

JOHN KATKO, New York 

BRIAN BABIN, Texas 

CRESENT HARDY, Nevada 

RYAN A. COSTELLO, Pennsylvania 

GARRET GRAVES, Louisiana 

MIMI WALTERS, California 

BARBARA COMSTOCK, Virginia 

CARLOS CURBELO, Florida 

DAVID ROUZER, North Carolina 

LEE M. ZELDIN, New York 

MIKE BOST, Illinois 


Pennsylvania, Chairman 

PETER A. DeFAZIO, Oregon 
ELEANOR HOLMES NORTON, District of 
Columbia 

JERROLD NADLER, New York 
CORRINE BROWN, Florida 
EDDIE BERNICE JOHNSON, Texas 
ELIJAH E. CUMMINGS, Maryland 
RICK LARSEN, Washington 
MICHAEL E. CAPUANO, Massachusetts 
GRACE F. NAPOLITANO, California 
DANIEL LIPINSKI, Illinois 
STEVE COHEN, Tennessee 
ALBIO SIRES, New Jersey 
DONNA F. EDWARDS, Maryland 
JOHN GARAMENDI, California 
ANDRE CARSON, Indiana 
JANICE HAHN, California 
RICHARD M. NOLAN, Minnesota 
ANN KIRKPATRICK, Arizona 
DINA TITUS, Nevada 
SEAN PATRICK MALONEY, New York 
ELIZABETH H. ESTY, Connecticut 
LOIS FRANKEL, Florida 
CHERI BUSTOS, Illinois 
JARED HUFFMAN, California 
JULIA BROWNLEY, California 


(II) 



Subcommittee on Railroads, Pipelines, and Hazardous Materials 


JEFF DENHAM, 

JOHN J. DUNCAN, jR., Tennessee 
JOHN L. MICA, Florida 
SAM GRAVES, Missouri 
CANDICE S. MILLER, Michigan 
LOU BARLETTA, Pennsylvania 
BLAKE FARENTHOLD, Texas 
RICHARD L. HANNA, New York 
DANIEL WEBSTER, Florida 
SCOTT PERRY, Pennsylvania 
TODD ROKITA, Indiana 
JOHN KATKO, New York 
BRIAN BABIN, Texas 
CRESENT HARDY, Nevada 
MIMI WALTERS, California 
LEE M. ZELDIN, New York 
MIKE BOST, Illinois 

BILL SHUSTER, Pennsylvania (Ex Officio) 


California, Chairman 

MICHAEL E. CAPUANO, Massachusetts 
CORRINE BROWN, Florida 
DANIEL LIPINSKI, Illinois 
JERROLD NADLER, New York 
ELIJAH E. CUMMINGS, Maryland 
RICK LARSEN, Washington 
STEVE COHEN, Tennessee 
ALBIO SIRES, New Jersey 
RICHARD M. NOLAN, Minnesota 
ELIZABETH H. ESTY, Connecticut 
GRACE F. NAPOLITANO, California 
JANICE HAHN, California 
PETER A. DeFAZIO, Oregon (Ex Officio) 


(HI) 




CONTENTS Page 

Summary of Subject Matter vi 

WITNESSES 

Hon. Sarah E. Feinberg, Administrator, Federal Railroad Administration: 

Testimony 3 

Prepared statement 41 

Dan Richard, Chairman of the Board, California High-Speed Rail Authority: 

Testimony 3 

Prepared statement 46 

Responses to questions for the record from the following Representatives: 

Hon. Jeff Denham of California 58 

Hon. Blake Farenthold of Texas 61 

Jim Hartnett, Executive Director, Caltrain: 

Testimony 3 

Prepared statement 62 

Responses to questions for the record from Hon. Jeff Denham, a Rep- 
resentative in Congress from the State of California 64 

Stuart M. Flashman, J.D., Ph.D., Attorney, Law Offices of Stuart M. 
Flashman: 

Testimony 3 

Prepared statement 66 

Robbie Hunter, President, State Building and Construction Trades Council 
of California: 

Testimony 3 

Prepared statement 96 

Responses to questions for the record from Hon. Jeff Denham, a Rep- 
resentative in Congress from the State of California 99 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Hon. Anna G. Eshoo, a Representative in Congress from the State of Cali- 
fornia 24 


(V) 



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August 26, 2016 


SUMMARY OF SUBJECT MATTER 


TO: Members, Subcommittee on Railroads, Pipelines, and Hazardous Materials 

FROM: Staff, Subcommittee on Railroads, Pipelines, and Hazardous Materials 

RE: Subcommittee Field Hearing on “Continued Oversight of the California High- 

Speed Rail Project” 


PURPOSE 


The Subcommittee on Railroads, Pipelines, and Hazardous Materials will meet on 
Monday, August 29, 2016, at 9:00 a.m. in the San Francisco Federal Building, located at 90 T* 
Street, San Francisco, CA, in room B040, to receive testimony regarding the status of the 
California High-Speed Rail Project (project). The project is the largest in the High Speed 
Intercity Passenger Rail (HSIPR) program administered by the Federal Railroad Administration 
(FRA). The Subcommittee will received testimony from representatives of the FRA, the 
California High-Speed Rail Authority, Caltrain, the State Building and Construction Trades Council of 
California, and other interested parties. 


BACKGROUND 


In General 


In 1996, the California High-Speed Rail Authority (CHSRA) was created as an 
independent state entity charged with designing a high-speed train system for the state. CHSRA 
first introduced a plan in 2000 for a system that would link all of California’s major population 
centers, including the San Francisco Bay Area, Los Angeles, and San Diego. The Safe, Reliable 
High-Speed Passenger Train Bond Act for the list Century, AB 3034, provided for the issuance 
of $9.95 billion in general obligation bonds for passenger rail in the state. Though removed from 
the ballot twice, the bond measure (Proposition 1 A) went to the voters on November 4, 2008, 
and was approved with 52,7 percent of the vote.’ 


' Under California law, any bill that calls for the issuance of general obligation bonds must be adopted by each 
house of the state Legislature by a two-thirds vote, signed by the Governor, and approved by a majority of voters. 


1 



Proposition I A Finances 


vii 


Proposition lA authorized the state to sell $9.95 billion in general obligation bonds, $9 
billion for the high-speed rail project and $950 million for inve.stments in regional, commuter, 
and intercity rail. The bonds would be available when appropriated by the legislature. However, 
the bond funds can only be used for one-half of the total cost of construction of each coixidor or 
segment of a corridor. Proposition 1 A requires CHSRA to seek private and other public funds to 
cover the remaining costs and also limits the amount of bond funds that can be used to fond 
certain pre-construction and administrative activities. CHSRA applied for and was awarded 
public funds from the FRA’s HSIPR grant program. 

High-Speed Intercity Passenger Rail Funding 

The California High-Speed Rail project is the single largest beneficiary of federal funding 
of the HSIPR program under the American Recovery and Reinvestment Act of 2009 (ARRA)^ 
and the fiscal year (FY) 2010 Consolidated Appropriations Act.^ In total, the project has been 
awarded $3,879 billion, of which $400 million from ARRA is for the San Francisco Transbay 
Terminal project, $2.55 billion from ARRA is for the Central Valley portion of the project, and 
$929 million from the FY 2010 Consolidated Appropriations Act is for the Central Valley 
portion of the project. This represents almost 39 percent of the total HSIPR grant funding 
awarded by the FRA, 

Most of tlie funding provided for the project will be utilized in California’s Central 
Valley on the Bakersfield-Fresno-Merced sections of the Phase 1 project or ICS. While the $3.48 
billion awarded to CHSRA for the Central Valley has been obligated, only $1.4 billion has 
actually been spent as of August 10, 2016. Under the federal appropriations law “five-year rule,” 
the $2.55 billion in federal funds provided through ARRA must be completely spent by 
September 30, 20 1 1 * Of the $400 million from ARRA for the San Francisco Transbay Terminal 
project, which was awarded to the Transbay Joint Powers Authority, not CHSRA, $397 million 
has been spent, 

A majority of the federal funding, $2.55 billion, comes under one grant agreement that 
requires a near 50/50 split of federal and state funding. FRA has revised the grant agreement 
several times, including in December 20 1 2, to allow for a “tapered match,” of federal and state 
funding. “Tapered match” means federal funding would be spent at a higher rate early on in the 
project in order to meet the 2017 deadline, with the state match “tapering in” later in the project 
and even beyond the 2017 deadline. 

Recent Changes to the FRA Funding Agreement 


" Pub. L. No. 11 1-5, 123 Stat. 208. 

’ Pub .L. No. 1 1 1-1 17, 123 Stat. 3056. 
*Seei\ U.S.C. §1552, 


2 



Vlll 


On May 1 8, 2016, FRA and CHSRA revised, for the sixth time, the Cooperative Grant 
Agreement for ARRA funding. This amended grant agreement maintains the tapered match 
approach, but also includes several new substantive changes: 

1 . Extension of the Performance Period. Under the original grant agreement, and the 
five previous amendments, the period of performance that CHSRA was required to 
report on to FRA was through FY 2018. In other words, while ARRA funds are 
required under law to be expended by the end of 2017, FRA had previously expected 
the activities supported by those expenditures (e.g., major construction, testing of 
equipment) would be completed by the end of 20 18. However, the May 18* 
amendment now extends that performance period through 2022. 

2. Authorizes Advance Payments. Under FRA’s norma! processes for capital grants, 
CHSRA performs work, and then seeks reimbursement of those expenditures from 
FRA, under the terras of the grant agreement. However, with this amendment, FRA 
has, for the first time, created a working capital account that would allow CHSRA to 
receive funds in advance of making expenditures. 

3. Positive Train Control Spectrum Acquisition. The sixth amendment allows ARRA 
funds to be used by CHSRA to acquire spectmm necessary for Positive Train Control 
(PTC), 

Recent Changes to Business Plan 

The project has undergone a number of different business plans with costs that have 
varied greatly over time. The first estimate contained in the 2000 Business Plan was $25 billion 
with a completion date in 2020. The 2008 Business Plan estimated the project would cost $33 
billion, with $12-16 billion in federal funds, and a completion date of 2020. One year later in 
2009, the estimate jumped to $43 billion, assuming $17-19 billion in federal funds, with a 
completion date of 2020. 

In November 2011, the CHSRA’s Draft 20 1 2 Business Plan had the costs skyrocket to a 
range of $98-1 18 billion, with approximately $52 billion in federal funds, and a delayed 
completion date of 2033, After significant public criticism, the CHSRA adjusted its costs 
downward in a 2012 Draft Revised Business Plan to $68 billion, with $42 billion in federal 
funds, and a completion date of 2028. The 2014 Business Plan maintained the total Phase 1 
lifecycle cost of $68 billion, but now envisioned significant funding coming from 25 percent of 
proceeds under California’s Cap and Trade program. The 2016 Business Plan now estimates a 
total cost of $64 billion, and, while it continues to assume federal funding, it does not identify a 
specific amount of additional federal funding needed. 

In addition to changing costs, the Business Plans over time have shown a significant 
change in the direction of the overall program. The 2012 and 2014 Business Plans envisioned a 
blended approach, under which an initial operating segment would be constructed in the Central 
Valley, and then would coimect to the north (Bay Area) and south (Los Angeles Basin) by tying 
into existing rail infrastructure (for example, the Caltrain system in the Bay Area). 


3 



IX 


The 2016 Business Plan takes the project in a new direction: rather than connect to both 
the north and the south, CHSRA is planning to focus on the north in the near tenn. The plan 
envisions building a rail line connecting the Central Valley with Silicon Valley, and then 
electrifying Caltrain’s comdor into San Francisco. Under this plan, CHRSA would begin service 
between the Central and Silicon Valleys by 2025, which it hopes will develop a record of 
ridership to spur more private sector investment. However, this change in scope means the 
planned rail connection between the Central Valley and Los Angeles Basin would be further off, 
and the existing rail gap between the major population centers would remain for the foreseeable 
future. 


WITNESS LIST 


The Honorable Sarah Feinberg 
Administrator 

Federal Railroad Administration 

Mr. Dan Richard 
Chairman of the Board 
California High-Speed Rail Authority 

Mr. Jim Hartnett 
CEO 
Caltrain 

Mr. Stuart Flashman 
Attorney 

Law Offices of Stuart Flashman 

Mr. Robbie Hunter 
President 

State Building and Construction Trades Council of California 


4 




CONTINUED OVERSIGHT OF THE CALIFORNIA 
HIGH-SPEED RAIL PROJECT 


MONDAY, AUGUST 29, 2016 

House of Representatives, 

Subcommittee on Railroads, Pipelines, and 
Hazardous Materials, 

Committee on Transportation and Infrastructure, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:06 a.m., in room 
B040, San Francisco Federal Building, 90 7th Street, San Fran- 
cisco, CA, Hon. Jeff Denham (Chairman of the subcommittee) pre- 
siding. 

Present: Representatives Denham [presiding], Farenthold, 
Capuano, LaMalfa, Huffman, and Lofgren. 

Mr. Denham. The subcommittee will come to order. 

I ask unanimous consent that noncommittee members be per- 
mitted to sit with the committee at today’s hearing and ask ques- 
tions. 

Without objection, so ordered. 

First let me welcome our guests in attendance, as well as our 
witnesses, and I want to thank Ms. Pelosi. We had a nice conversa- 
tion. This is a beautiful Federal building, and we enjoy this beau- 
tiful space being here in the bay area. 

This hearing is about one thing, and that is continued oversight 
by the Federal Government. There is a huge investment by the 
Federal taxpayers, as well as by the State taxpayers. So the main 
focus of this hearing will be on that oversight. This project has 
been awarded nearly $4 billion in Federal funding, and it rep- 
resents nearly 40 percent of all high-speed rail funding awarded by 
the Federal Railroad Administration, the FRA. 

That is why I focused on this project since I became chairman 
of the Subcommittee on Railroads, Pipelines, and Hazardous Mate- 
rials, and unfortunately I have watched as costs have gone up and 
up, and project plans have continued to change. When the voters 
of California approved this as Prop. lA, they approved a $33 billion 
project that had equal funding from State, Federal, and private in- 
vestors. Since then, this project has risen to $43 billion, then over 
$100 billion, and then cut back down to $64 billion by cutting off 
San Diego and Sacramento. 

The 2016 business plan recently approved by the authority also 
had a new focus, connecting the Central Valley segment with the 
bay area via an electrified Caltrain corridor, with no near-term 
progress on closing the existing rail gap across the Tehachapi 
Mountains in southern California, meaning right now Amtrak has 

( 1 ) 



2 


to let their passengers off to get on a bus, take the bus over the 
Tehachapis, and then get back on a train again. So this is some- 
thing that we are going to have to address as this project moves 
forward through phase 1. 

Today I want to explore what was originally promised to Califor- 
nians when they approved Prop. lA in 2008, where the project 
stands now, and whether there is a realistic plan to complete the 
project that was sold to voters. We must also look at the Federal 
taxpayer and what they are going to be on the hook for in the fu- 
ture. Meeting the project mandate may be more difficult than be- 
fore if the 25-percent set-aside from the California Cap and Trade 
Program does not produce the revenues the authority is currently 
counting on. The early Cap and Trade options have not raised the 
revenue the State was originally expecting, and I look forward to 
discussing my concerns on that issue today. 

I am also happy FRA Administrator Feinberg could be with us 
today, as her agency recently amended the grant agreement with 
the authority for the sixth time. I want to discuss the changes 
made in that agreement and also talk more broadly about what the 
ongoing Federal involvement with this project will be. 

California voters narrowly passed in 2008 this plan before voters. 
If the project is going to move forward beyond current activities, we 
need to know what the State and Federal obligation is. If the au- 
thority can’t provide specific deliverables and a timeframe, then I 
believe it would be time for Californians to go back to the polls to 
vote on whether to continue this project. 

We have many problems facing California, most notably one of 
the worst droughts that we have ever seen. The money allocated 
to this project was part of the Federal stimulus package, which was 
done 8 years ago. In a State grappling with the lack of an adequate 
water infrastructure, we could have built long-term, sustainable 
water storage for a fraction of the cost. There are many shovel- 
ready projects that will directly benefit millions of California resi- 
dents, including a number of rail projects in the bay area, a num- 
ber of transportation projects across the State, and most critical is 
water infrastructure that could be built. 

I would now like to recognize the ranking member, Mike 
Capuano from Massachusetts, for 5 minutes for any opening state- 
ment he may have. 

Mr. Capuano. Thank you, Mr. Chairman. 

First of all, thank you all for having us here, and thank you for 
coming. 

This is an important issue, as is any time the Federal Govern- 
ment spends your tax dollars. In this particular case, it is billions 
of dollars. I myself am a strong proponent of the concept of high- 
speed rail any place in this country that can support it. Certainly, 
I think there is a good argument by any stretch of the imagination 
that California should be able to handle and support a high-speed 
rail system. 

I live in an area where what we have is old, and we struggle 
with problems of how to get it to a true high-speed system. You are 
building a new one, and my hope is that you can lead the way to 
show us how to improve our system. 



3 


One way or the other, America is going to have high-speed rail 
across this country. It will take time, it will cost money, and there 
will be mistakes made. There may or may not have been mistakes 
made here already, or there will be if there hasn’t been already. 
That is normal. That is a normal part of the process. But I think 
that makes these oversight hearings even more important. Even if 
you are doing the best job possible, there are still differences of 
opinion, there are still people who make mistakes, things happen 
that you didn’t anticipate, and therefore it is our responsibility to 
try our best to make sure that Federal tax dollars are spent as 
wisely as possible. That is why I wanted to come to California, and 
that is why I am looking forward to the testimony here today. 

With that, I will yield back so we can hear from people who know 
what they are talking about. 

Mr. Denham. Thank you, Mr. Capuano. 

Let me first welcome our other Members here: three Califor- 
nians, Ms. Lofgren, Mr. Huffman, Mr. LaMalfa; and the vice chair 
from the great State of Texas, Mr. Farenthold. 

Our panel is with the Honorable Sarah Feinberg; Mr. Dan Rich- 
ard; Mr. Jim Hartnett, Mr. Stuart Flashman; and Mr. Robbie 
Hunter. 

I ask unanimous consent that our witnesses’ full statements be 
included in the record. 

Without objection, so ordered. 

Since your written testimony has been made part of the record, 
the subcommittee will request that you limit your testimony to 5 
minutes. 

Ms. Feinberg, you may proceed. Thank you very much. 

TESTIMONY OF HON. SARAH E. FEINBERG, ADMINISTRATOR, 
FEDERAL RAILROAD ADMINISTRATION; DAN RICHARD, 
CHAIRMAN OF THE BOARD, CALIFORNIA HIGH-SPEED RAIL 
AUTHORITY; JIM HARTNETT, EXECUTIVE DIRECTOR, 
CALTRAIN; STUART M. FLASHMAN, J.D., PH.D., ATTORNEY, 
LAW OFFICES OF STUART M. FLASHMAN; AND ROBBIE 
HUNTER, PRESIDENT, STATE BUILDING AND CONSTRUC- 
TION TRADES COUNCIL OF CALIFORNIA 

Ms. Feinberg. Chairman Denham, Ranking Member Capuano, 
other Members who have joined us, thank you for inviting me to 
today’s hearing. 

Much attention has been paid to the urgent need for the United 
States to build a modern transportation system to keep up with our 
growing population, increased congestion, and more diverse econ- 
omy. Congress rightfully recognized nearly 8 years ago that in 
order to achieve this goal, our transportation system must include 
more reliable, more frequent, and faster passenger rail service. 
Congress passed two landmark pieces of legislation that estab- 
lished FRA’s High-Speed Rail Program, and then through the Re- 
covery Act provided the seed money to build the system. 

FRA and Congress conceived of a high-speed and intercity pas- 
senger rail program to be national in scope but led by the State in 
execution. With the launch of the program, there was immediate 
and significant interest. States submitted nearly 500 applications 
requesting more than $75 billion worth of projects, far exceeding 



4 


the funds Congress had made available. FRA eventually awarded 
$10 billion to nearly 150 rail projects, including $3.5 billion to Cali- 
fornia. 

With California’s growing population, the State was understand- 
ably focused on building out a high-speed rail system that would 
serve its growing communities, because 2 railroad tracks can carry 
as many travelers in 1 hour as 16 lanes of a congested freeway. As 
the chairman knows and as anyone who lives, works, or visits the 
bay area or the Los Angeles area knows, they can recount far too 
many nightmare stories about congestion on the roads and in the 
sky: vehicular and air traffic at all times of day, constant com- 
muters, families and businesses, hours of time and resources they 
can spend otherwise. 

The L.A. to San Francisco flight alone has become one of the 
busiest and most delay-prone air markets in the United States. 
One in every five flights is late by more than an hour. And the 
challenges of moving more people and goods in a safe and efficient 
way will only continue to grow. By 2050, California is predicted to 
be home to another 12 million people. To add capacity to Califor- 
nia’s transportation system, the California High-Speed Rail Au- 
thority is leveraging the majority of the $3.5 billion that FRA 
awarded to construct the first 119 miles of rail in California’s Cen- 
tral Valley. 

The Federal investment made in California’s high-speed rail is 
significant, and FRA takes its obligations to protect the taxpayers’ 
investment seriously. FRA closely monitors the California project, 
as we do with all grants. With all major and ambitious transpor- 
tation projects, there have been and remain important challenges 
that demand continued attention. 

Consistent with grants management and oversight best practices, 
FRA works closely with all of our grantees to ensure that taxpayer 
dollars are spent wisely and that contractual agreements are cur- 
rent and adhered to. 

To be clear, and despite reporting to the contrary, ensuring that 
a project is meeting its obligations and amending contractual grant 
agreements is not only a due diligence requirement but it is also 
standard practice for any agency that oversees grants. 

Last spring, the California High-Speed Rail Authority and FRA 
executed the Sixth Amendment to ensure that the contractual 
agreement that exists between the two entities accurately reflects 
the current project status. California High-Speed Rail Authority 
also requested FRA’s approval of a $60 million working capital ad- 
vance for right-of-way acquisitions needed to allow construction 
work to progress and remain on schedule. 

A working capital advance is one of the approved payment meth- 
ods allowed under the Federal Government’s stringent grant pay- 
ment rules. This tool is available to any grantee and can be used 
effectively for timely right-of-way acquisition on large infrastruc- 
ture projects across the country. In fact, other agencies, like the 
Department of Health and Human Services and the Department of 
Homeland Security, also use the same method of payment. 

Mr. Chairman, in closing, for centuries leaders in California and 
across the United States have fulfilled bold projects. Many of these 
projects haven’t been easy or without challenges, but they are 



5 


worth the persistence and dedication because they are necessary to 
move our country forward. I believe this project is no different. 

We continue to look forward to working with California, with 
Members of Congress, with your staff and your committee as we 
continue to make progress in bringing this project to completion. 
Thank you, and I look forward to your questions. 

Mr. Denham. Thank you, Ms. Feinberg. 

Mr. Richard, the floor is yours. 

Mr. Richard. Thank you. Chairman Denham, Ranking Member 
Capuano, and other Members of this committee and the Congress, 
my name is Dan Richard. I am the chairman of the California 
High-Speed Rail Authority Board. I appreciate the opportunity to 
appear before you today to provide an update on the progress that 
California has made in developing the high-speed rail system. 

The Federal Government, through actions by the Congress and 
the administration, has provided some $3.5 billion to commence de- 
sign and construction of the system, funds that have proven vital 
to our initial efforts. Accordingly, oversight by the Congress 
through this committee is an important function to bolster public 
confidence that these funds are being well spent. 

I am pleased also to share this panel with Administrator 
Feinberg of the Federal Railroad Administration. FRA has been a 
strong partner in this program, and we appreciate her leadership 
and that of her staff and her predecessors. 

Mr. Chairman, I would like to summarize four key points in out- 
lining our current status and progress. 

First, the California high-speed Rail program is an essential ele- 
ment of the State’s endeavor to build a sustainable economic fu- 
ture. The voters in 2008 approved what will ultimately be an 800- 
mile system with the first phase of 520 miles to connect Los Ange- 
les, San Francisco, and the Central Valley. But what is more im- 
portant here is that California is building much more than a high- 
speed train system. Our legislature in 2012 embarked on a $13 bil- 
lion statewide rail modernization. High-speed rail is the backbone 
of that system, but that system extends to major improvements 
such as Caltrain electrification here on the San Francisco penin- 
sula, improved Amtrak service, regional rail like Metrolink in Los 
Angeles, the ACE Train that is important in your district, Mr. 
Chairman, and much more. 

All told, this rail modernization of California through statewide, 
regional and local systems will vault us into a more sustainable fu- 
ture and one that is also cheaper to build and maintain, much 
cheaper, in fact, than the cost of the equivalent mobility of new 
highways and airports required to sustain the 50 million people 
that we must serve by the middle of this decade — excuse me, by 
the middle of the century. 

Second, high-speed rail construction in California is now under- 
way. It is proceeding smoothly, and we are maintaining effective 
management and cost control of the program. We now have three 
sets of construction packages totaling $3 billion in progress across 
about 110 miles of the Central Valley. Hundreds of workers and 
scores of companies, including small business and disabled veteran 
businesses, are on the job. 



6 


But the indirect impacts have engaged thousands more already 
across the State. All of these construction contracts have come in 
under our engineer’s estimates. In fact, the combined total, consid- 
ering our low and high ranges, is that we have seen winning bids 
come in between $500 million and $1.7 billion less than we esti- 
mated these packages would cost us. 

We have overcome startup problems like slower-than-expected 
right-of-way acquisition and higher costs for third-party contracts, 
but we are still well within our budget contingencies. 

Third, our recent 2016 business plan marked a milestone in the 
development of the project. By emphasizing the completion of an 
initial operating segment from the Central Valley to the Silicon 
Valley, we laid out a plan that can be accomplished with available 
funds that are in hand or expected. Silicon Valley is the engine not 
only of California’s economy but of the Nation’s, and yet it faces se- 
vere limitations on housing and expansion. The Central Valley is 
historically an area of underinvestment. The prospect of connecting 
these areas of our State has generated enthusiasm in both regions. 
Significantly, based on more advanced engineering and experience 
to date, now our estimate for the total system completion has been 
reduced by some $6 billion. 

My last point is that while we know this program has a con- 
troversial history and has had its share of hurdles, we are not only 
on track but I want to emphasize that we are absolutely fulfilling 
the purposes of the State bond act that launched this effort. 

With respect, Mr. Chairman, I noticed that there was a state- 
ment that was included in the committee’s notice of this hearing 
that said that the program no longer provides full high-speed rail 
service from Los Angeles to San Francisco. This is not correct. We 
are absolutely fulfilling the mandate of providing 200-mile-per-hour 
electrified service that is designed to achieve transit from L.A. to 
San Francisco in 2 hours and 40 minutes or less without an oper- 
ating subsidy. There are no changes from that commitment. 

As you know, we adopted the so-called blended system to share 
tracks with regional rail in urban areas like Caltrain, but that only 
constitutes about 15 percent of the track area, and this was sug- 
gested by one of your colleagues in the Congress and by local elect- 
ed Representatives, and was recommended by an independent peer 
review group as something that could dramatically reduce costs 
while meeting the bond act requirements. 

Unfortunately, this is one of many false narratives that have 
grown up around this program. I hope today’s hearing will allow 
us to examine those issues and correct the record. 

Mr. Chairman, thank you again for the honor of appearing before 
this committee. We look forward to your questions. 

Mr. Denham. Thank you, Mr. Richard. 

Mr. Hartnett, you are recognized for 5 minutes. 

Mr. Hartnett. Thank you very much, Mr. Chairman and Mem- 
bers. Good morning. Thank you for your attention to this issue and 
for inviting us to share a local perspective. 

I am Jim Hartnett, the executive director of the Caltrain com- 
muter rail system and the CEO of the San Mateo County Transit 
District. I am also a past member of the California High-Speed Rail 
Authority Board of Directors and a former mayor of Redwood City. 



7 


When voters approved Prop. lA in 2008, it wasn’t just about con- 
necting the State with high-speed rail. It was also about improving 
transportation connectivity on existing systems. The measure in- 
cluded significant resources dedicated to upgrading local transpor- 
tation services to feed the statewide network and to improve mobil- 
ity options for surrounding communities. 

Large-scale, visionary projects like high-speed rail can and 
should be planned and delivered in a way that prioritizes invest- 
ments in local improvements while also making incremental but 
significant progress toward the long-term vision. 

During my time on the California High-Speed Rail Authority 
Board, I worked with my colleagues to ensure that this approach 
would be embraced. The product of those efforts was SB 1029, 
which appropriated funding for high-speed rail construction in the 
Central Valley, but also directed over $1 billion for local and re- 
gional improvements on the bookends in southern California and 
the bay area. In our case, this State funding is being used to lever- 
age over $1 billion in local, regional, and Federal funds to upgrade 
the Caltrain corridor and allow us to deliver more service at a time 
when our communities need it the most. 

Caltrain is struggling to accommodate unprecedented regional 
growth. Two thousand sixteen marked our sixth consecutive year 
of record-setting ridership. As Highway 101 and 280 have become 
more and more congested, employers have turned to Caltrain as 
the preferred commute option between San Francisco and Silicon 
Valley. As a result, our peak-hour service is well over 100 percent 
capacity, with ridership on some trains exceeding 125 percent of 
available seats. 

The Caltrain corridor is arguably the most economically produc- 
tive area in the State. The communities served by our 51-mile rail- 
road are responsible for 14 percent of the State’s GDP, 20 percent 
of California tax revenue, and are the birthplace of over one-half 
of California patents. 

However, the region cannot continue to thrive without equipping 
the 150-year-old rail corridor with a modernized transit system ca- 
pable of accommodating current and future ridership demand. 

Fortunately, with local. State and Federal help, Caltrain has 
been able to advance the Caltrain Modernization Program. The 
centerpiece of this program is the transformation of the corridor 
from its diesel fleet to a system that features high-performance 
electric trains capable of delivering cleaner, faster, and more fre- 
quent service to peninsula communities. 

When complete, electrification of Caltrain will be able to serve 
more riders at more stations. As a result, 619,000 vehicle miles 
traveled will be eliminated every day and the system’s emissions 
will be reduced by 97 percent, eliminating over 176,000 tons of C02 
annually. 

Caltrain and the California High-Speed Rail Authority have 
worked with several local, regional and Federal partners to secure 
funding for the Caltrain Modernization Program as an early invest- 
ment in the high-speed rail system. Six bay area funding partners 
have agreed to commit significant local funds in order to leverage 
over $700 million in high-speed rail and State funding, and these 



8 


investments have positioned the project to receive almost $650 mil- 
lion in Federal Transit Administration discretionary grant funds. 

Thanks to these commitments, Caltrain was ahle to authorize 
contractors to begin design work on the project. The next steps will 
be construction of the project and the procurement of electric 
trains, work that will create over $2.5 billion in economic value, in- 
cluding almost 10,000 new jobs during construction. 

Meanwhile, we are also collaborating with the California High- 
Speed Rail Authority as it begins the environmental process for ad- 
ditional improvements that will be needed to equip the corridor to 
accommodate high-speed rail service. When high-speed rail is ex- 
tended north of San Jose, Caltrain and the California High-Speed 
Rail Authority will share the corridor and operate on a blended 
system to San Francisco. The planning and design of these im- 
provements will be carefully considered to ensure that impacts on 
surrounding neighborhoods are minimized and benefits are real- 
ized. 

Thank you very much, Mr. Chairman. 

Mr. Denham. Thank you, Mr. Hartnett. 

Mr. Flashman, you are recognized. 

Mr. Flashman. Thank you. Chairman Denham. Good morning. 
Chairman Denham, Mr. Capuano, and Congress Members. Thank 
you for the opportunity to testify today. 

Let me start by saying that I have no conceptual problem with 
high-speed rail. High-speed rail systems in other countries have 
shown they can, if planned and implemented prudently, be cost-ef- 
fective and improve transportation efficiency while reducing green- 
house gas emissions. 

Here in California, however, too much has been promised and too 
little will be delivered. I will focus on legal issues affecting the 
California high-speed rail project’s use of State funds and the asso- 
ciated risk to the Federal Treasury from the California High-Speed 
Rail Authority’s, or CHSRA’s, use of Federal grant funds for con- 
struction and other activities. 

Before doing that, I want to comment briefly on CHSRA’s current 
financial situation and why this issue is important. As my written 
testimony explains in more detail, CHSRA currently has only two 
sources of funds: $3.5 billion in Federal grant funds, and State 
funds, primarily Prop. lA funds, plus a much smaller contribution 
from the greenhouse gas Cap and Trade auction proceeds. 

Prop. lA asked that CHSRA seek private funding, but no private 
entity has stepped forward to invest funds in the project to this 
point. There are good reasons for that. CHSRA has over $6 billion 
in appropriated funds, but restrictions on using Prop. lA funds for 
construction prevent CHSRA from using those funds. Con- 
sequently, CHSRA current construction funding is limited to its 
Federal grants plus a small amount of Cap and Trade auction pro- 
ceeds. In essence, CHSRA is like a steam engine with almost no 
coal left to shovel in its fire box. It may keep going for a while 
longer, but it will eventually run out of steam and stop cold. 

The California Legislature, in writing Prop. lA, was aware that 
voters were worried about the risk in approving more general obli- 
gation bonds that would eventually be on their shoulders. Con- 
sequently, it put into the measure what the California Court of Ap- 



9 


peals has called a financial straitjacket, intended to reassure voters 
that the funds would not be wasted. There are stringent procedural 
and substantive requirements on how and when CHSRA can use 
the bond funds. 

While the courts have allowed the legislature to appropriate bond 
funds without fully complying with Prop. lA, those same courts 
have made clear that before those funds can be used for construc- 
tion, CHSRA will have to comply with Prop. lA’s requirements. 
With CHSRA’s currently politically motivated design, that is vir- 
tually impossible. 

Prop. lA requires CHSRA to show it has available all the funds 
needed to complete construction of a usable segment that will be 
suitable and ready for high-speed rail operation. CHSRA optimisti- 
cally estimates that its current usable segment from Wasco to San 
Jose will cost over $20 billion. At most, CHSRA has maybe $6 to 
$8 billion in available funding. Unless CHSRA can show where it 
has squirreled away over $10 billion, it cannot meet that require- 
ment. 

In addition, service on that segment must be able to run without 
a public operating subsidy. Even if you accept CHSRA’s highly opti- 
mistic ridership estimates, its usable segment is very unlikely to be 
able to do so. Consequently, no Prop. lA funds can be used to build 
that segment. 

Even if CHSRA could meet these procedural requirements. Prop. 
lA’s substantive requirements would still block use of Prop. lA 
funds. Prop. lA requires that trains be able to travel from the 
Transbay Transit Center in San Francisco to Los Angeles Union 
Station in no more than 2 hours and 40 minutes. With the indirect 
route that CHSRA has chosen, making the trip in less than 3 hours 
is basically impossible. Nor can the current legislatively mandated 
blended system meet the required 30-minute travel time between 
San Francisco and San Jose. 

Further, the blended system, which requires CHSRA and 
Caltrain to share the same tracks between San Jose and San Fran- 
cisco, also precludes meeting Prop. lA’s 5-minute headway require- 
ment. 

As for using Cap and Trade funds, that system is currently 
under legal challenge. Even if it survives, the current funding is 
only $4.5 million this year, and Cap and Trade’s authorization runs 
out in 2020. With the legislature having rejected its extension and 
indicating a preference for a revenue-neutral carbon tax where the 
collected funds would be rebated to businesses and the public, that 
would leave no proceeds to fund high-speed rail. 

In short, despite its optimistic statements at this point, CHSRA 
has no viable financial way forward. 

As I said at the start, I believe a prudently planned and executed 
high-speed rail system could be beneficial for California. Unfortu- 
nately, CHSRA has given no indication that it intends to rethink 
its current disastrous course, which will result in more litigation 
but no useful rail project. 

Thank you. 

Mr. Denham. Thank you, Mr. Flashman. 

Mr. Hunter, you may proceed. 



10 


Mr. Hunter. Good morning, Chairman Denham, Ranking Mem- 
ber Capuano, members of the subcommittee. I appreciate the op- 
portunity to appear before you today to discuss the California high- 
speed rail construction program. 

I am the president of the State Building and Construction Trades 
Council of California. I am an iron worker by trade and spent 27 
years working in the field building skyscrapers and bridges 
throughout California. Our council represents in excess of 400,000 
skilled and trained California construction workers, including 
48,000 apprentices that have graduated or the equivalent from 
California high schools. 

Each and every one of these workers work for private construc- 
tion companies building our harbors, airports, water treatment 
plants, freeways, transit systems, dams, as well as the vast major- 
ity of commercial and residential projects throughout the State. 

These contractors that we work for need a streamlined, highly 
trained, competent work force to compete, using the least amount 
of people, building projects in the shortest timeframe, done once, 
done right, under the lowest bid. 

The workforce that we represent drives the economy of Cali- 
fornia. They set aside a portion of their hourly wage for their pen- 
sion and medical benefits and even in retirement are not a burden 
to the State or the Federal Government. 

I am very proud to report that at this very moment, several hun- 
dred of these workers, who are residents of the Central Valley, are 
on the job building the high-speed rail in the Central Valley. This 
is an area where, during the Great Recession, we have had unem- 
ployment in excess of 60 percent, and the Valley itself has been a 
traditionally — has had some of the highest unemployment state- 
wide in the general population. Now these workers are building the 
high-speed rail system that will transform the Valley and all of 
California. 

Of course, I am happy that these workers are earning a pay- 
check, supporting their families, and driving the economy. But I 
am also gratified that they are creating a third mode of transpor- 
tation, something that California desperately needs right now and 
that will greatly benefit the people of the State of California for 
generations to come. 

Furthermore, the project is being built efficiently and economi- 
cally. The best value bids for the first construction packages have 
ranged from 13 to 45 percent below the engineer’s estimated cost, 
resulting in savings of hundreds of millions of dollars so far. 

Decades from now, I believe California will look back with grati- 
tude at the vision of this generation’s leaders, whose foresight re- 
sulted in a magnificent, efficient high-speed rail system, less con- 
gestion on our roads, airports, and a healthier environment. We 
simply cannot afford to not build this vitally important infrastruc- 
ture project. 

California’s transportation system is already overtaxed, and our 
population will pass 50 million by mid-century. Doing nothing will 
ultimately cost far more than building this essential system today. 
High-speed rail is the only viable means of making sure our trans- 
portation infrastructure can meet our growing demand. 



11 


Continuing to build more and more freeways and airports would 
be more expensive, more environmentally damaging, and less effi- 
cient for moving millions of Californians up and down the State. 

In fact, the nonpartisan Legislative Analyst’s Office has reported 
that the project would, and I am quoting, “alleviate the need to 
build over 3,000 miles of freeway, and 5 airport runways and 90 
new departure gates — at a cost of nearly $100 billion — that would 
otherwise be necessary to accommodate interstate travel by 2030.” 

By saving $100 billion, the project pays for itself To remove any 
doubt, just look at the spectacular success of high-speed rail around 
the world. We have learned from places like Spain, France, China, 
Germany, Japan, and many other countries that high-speed rail is 
the more efficient and preferred mode of transportation between 
population centers between 100 and 500 miles. That is precisely 
the corridor California’s high-speed rail will serve. 

High-speed rail is working breathtakingly well everywhere else 
in the world. California needs its great benefits even more. As the 
2008 ballot summary language points out, high-speed rail will pro- 
vide long-distance commuters with a safe, convenient, affordable, 
clean and reliable alternative to driving and high gas prices. It will 
reduce traffic congestion on California’s highways and at the 
State’s airports. It will reduce California’s dependence on foreign 
oil. It will reduce air pollution and global warming greenhouse 
gases. It will provide fast, time-saving connections between Califor- 
nia’s major population hubs. It will bring thousands of good jobs to 
working families across the State. 

We cannot afford to fall behind the rest of the country, the rest 
of the world. Our State needs the economic, environmental, and 
quality-of-life benefits of a third mode of a clean, fast, mass transit 
system to meet the needs of our children and grandchildren just as 
generations before us paid for and built the infrastructure that has 
supported today’s population and economy. We need to build this 
system. 

I would say that we have built the infrastructure of California, 
the building trades, for over 130 years. We were criticized heavily 
on the Golden Gate Bridge. It was the first bridge to nowhere. The 
Hoover Dam 

Mr. Denham. I’ll ask you to wrap up. We are a little over time 
already. 

Mr. Hunter. The Hoover Dam was a boondoggle that was going 
to bankrupt the country. 

Thank you, sir. 

Mr. Denham. Thank you, Mr. Hunter. 

I would like to thank each of our witnesses for their testimony 
today. 

There are a number of different questions here on the update 
and progress of this project. Our goal is to get in two rounds of 
questioning, so I would ask Members to keep their time allotment 
to 5 minutes, as well as our witnesses to answer any questions as 
succinctly as possible. 

I am going to start off today’s round here, mostly focused on the 
most recent changes. 

As you and I had talked, Ms. Feinberg, on the last change, the 
fifth change to the agreement about the tapered match, I once 



12 


again talked about my concern about spending all Federal dollars 
first and then owing the State dollars. My concern with tapered 
match is it leaves California on the hook, and the only penalty or 
the only way to extract that money would be to hold up rail dollars, 
highway dollars, or even education or housing grants. So I still 
have that big concern about the last change to the grant agree- 
ment. 

But specifically on this sixth change, when I had sent out my 
statement earlier in the year about this being a blank check, I 
know that you had taken some concern with that. 

Actually, let me address this to Mr. Richard first. My concern is 
with this most recent change is that it is a blank check to spend 
money and get beyond the ARRA funding of 2017. This is being 
used for working capital. So my concern is that you could make a 
request at the end of 2017 to get beyond the original congressional 
mandate to allow you to spend money beyond that. 

From the experts that we have talked to in the construction sec- 
tor, a $2.6 million burn rate is a pretty high burn rate to be able 
to accomplish spending the $3.5 billion by the end of 2017. So the 
concern is that you get close to the 2017 deadline, you go back to 
FRA and you say we are going to need future dollars and we are 
putting the working capital in ahead of time. Mr. Richard? 

Mr. Richard. Mr. Chairman, I can certainly understand that 
concern. Let me allay your concerns this way. First of all, the num- 
ber we should be focused on is not $3.5 billion but $2.55 billion, be- 
cause the remaining $980-some-milhon is fiscal year 2010 money 
that does not have any kind of statutory deadline for expenditure. 
So under the Stimulus Act, we have to spend $2.55 billion by Sep- 
tember 2017. We are about 70 percent of the way through that 
right now. Between invoices we have been giving to Ms. Feinberg’s 
agency and work that has been accrued but not yet invoiced, we 
are at $1.8 billion. The burn rate to accomplish the rest is less than 
the average burn rate that we have seen in the last 3 or 4 months. 
So we have no doubt that we are going to meet the ARRA deadline 
for the expenditure. 

Let me just say with respect to your concern, the purpose of the 
working capital request was simply to get ahead of money for land 
acquisition. Land acquisition is the most fundamental piece of the 
construction. If we can’t deliver the parcel, the contractor can’t do 
the work. So that is what we are using it for, and basically I would 
just say to you what you want to do with the ARRA money is what 
the Congress intended, put people to work. Waiting until the last 
minute, it is just not the way the program is going right now. 

We got off to a slow start on real estate acquisition. We want to 
make sure we don’t fall behind on that again. The working capital 
helps us get the real estate land acquisition done. But this is all 
about people building things, and they are doing it right now, and 
the burn rate is such that we will accomplish the 2017 deadline. 

Mr. Denham. So you can commit, then, that you will not request 
an advance payment for the ARRA funds in 2017 to keep you on 
the congressional deadline? 

Mr. Richard. That — I will commit to that. 

Mr. Denham. Thank you. 



13 


And, Ms. Feinberg, you would also commit that if there was such 
an advance request at the end of the 2017 deadline, that you would 
not approve such a request? 

Ms. Feinberg. Correct. We see no — we have no interest in going 
beyond the September 2017 deadline, and beyond that we don’t 
think there will be a request for it. 

Mr. Denham. Thank you. 

Mr. Hartnett, the initial operating segment has changed. The 
blended approach is a somewhat new idea. The question that I re- 
ceived is primarily about safety in the community along your line. 
If the track is now electrified, with pedestrian traffic being the big- 
gest issue of train accidents, do you expect this new electrification 
to change any safety concerns? 

Mr. Hartnett. I do not. We currently serve over 65,000 riders 
a day. Our safety record is good. The pedestrian safety issues are 
primarily with respect to trespassers on our line, and a number of 
the trespassers are intentionally there. That does create safety con- 
cerns, but we do work well to address that. 

Mr. Denham. And I am not questioning your safety record. You 
guys have a good record. My concern is that these are now going 
to be hot tracks, and recognizing that we have pedestrians and 
trespassers in those areas, does that create a new challenge? 

Mr. Hartnett. It does not in the sense that — fortunately, it is 
not a third rail. You can walk on them. You can be on the tracks 
and not be subject to electrification. It is overhead wiring, which 
has a tremendous safety record. I have had the privilege of living 
off and on in Japan for 8 years using their electrified services, and 
you can do it in a very safe manner with electrification itself, not 
enhancing any safety risks. 

Mr. Denham. So the speed of the train, if the train can actually 
get to 200, 220 miles an hour, does that create any safety concerns 
to the communities? 

Mr. Hartnett. It won’t be going at that rate of speed through 
the peninsula. So the speed is not going to affect the safety. The 
trains for us in particular are going to be quicker in the sense that, 
because they are electrified, they can slow down quicker and speed 
up quicker, which actually makes it safer overall in terms of our 
service, and I think in the blended service as well. 

Mr. Denham. So if the train is not going to hit those high speeds 
in San Jose to San Francisco, how do we expect to hit 2 hours and 
40 minutes or 2 hours and 30 minutes? 

Mr. Hartnett. That would be a design question. I think Mr. 
Richard can respond to that. 

Mr. Denham. Mr. Richard? 

Mr. Richard. Thank you, Mr. Chairman. The train was never 
going to go at those speeds in the urban areas, even before the 
blended service. In fact, I don’t know if my staff brought it, but one 
of the things I would like to submit to the committee is a page from 
our 2008 business plan which was before anybody even talked 
about blended service, when they were only talking about a single 
high-speed rail separate service. That map shows that in the urban 
areas, the speeds were going to be around 120 miles an hour. This 
is because of the geometry. You have to have the curves to go at 
those high speeds. You are really taking a lot of land in urban 



14 


areas. It is very expensive. You see it in other countries. As you 
come into the cities, the trains go slower. 

One of the great things about the blended service — and this is 
one of the reasons the independent peer review group rec- 
ommended to the legislature that it support the blended service — 
was the notion that you could maintain essentially the same speeds 
in the urban areas that we would have with separate tracks but 
at a cost reduction of about $20 billion between north and south. 
That is why we decided that we would be able to do that. 

It may have some impact on capacity. Mr. Flashman raised that 
question. We can talk about it. But it really has no impact on the 
speeds. I just want to say to you for the record, right now our engi- 
neers are telling us that the current design would get you from Los 
Angeles to San Francisco with the blended service in about 2 hours 
and 33 minutes. We are about 7 minutes ahead. So that has never 
been a concern that we have had. 

Finally, just on your earlier point, part of the electrification pro- 
gram will be the installation of intrusion detection devices and 
other advanced mechanisms to try to minimize or eliminate unau- 
thorized entry into the corridor there. 

Mr. Denham. And what does that mean? 

Mr. Richard. Fencing, electronic intrusion detection, things like 
that. 

Mr. Denham. So like some type of sensor that would allow you 
to know whether or not trespassers went on there, on the walls of 
the sides of the 

Mr. Richard. Right. I think it is sensors and fencing, but before 
I get myself to a place where I don’t know what I am talking about, 
perhaps I can supplement that answer for the record for the com- 
mittee. 

Mr. Denham. Certainly. It is more out of curiosity for the future 
of what those residents are going to be looking at, if you could pro- 
vide that to the committee. 

Mr. Richard. Yes, sir. 

Mr. Denham. We would appreciate it. 

Mr. Hartnett, does the Caltrain go 120 miles an hour today? 

Mr. Hartnett. It does not. 

Mr. Denham. What is the current speed? 

Mr. Hartnett. We are generally at 79 miles per hour. 

Mr. Denham. And on a blended track, you have an opportunity 
to have Caltrain on the same tracks as California high-speed rail 
would. Do you anticipate an increase in speed for Caltrain? What 
would it be? 

Mr. Hartnett. We are not going to increase our speed with the 
Peninsula Corridor Electrification Project. We are going to increase 
our quickness. With the diesel fleet, it takes a very long time to 
slow down and stop at a station, and a very long time to get out 
of the station and move up. So while going at the same top speeds, 
we will be able to get into the stations quicker and get out of them 
quicker. So we will be able to, for example, a ride that would cur- 
rently take an hour, San Francisco to San Jose, if we use the same 
stops, it could be 45 minutes instead of an hour. So we will have 
choices as to go quicker up and down the line or to stop at more 
stations, both of which will enhance our capacity. We have modeled 



15 


increasing Caltrain’s speed to 110 mph in a blended system, but 
the final decision on speed has not been made. 

Mr. Denham. Thank you. 

And finally, the last question, Mr. Richard. We talked about the 
initial operating segment, the initial construction segment. Mr. 
Flashman had said Wasco. Is it Wasco, Shatter, somewhere in-be- 
tween? And where is the initial construction segment? Can you de- 
fine both ends of the initial construction segment? 

Mr. Richard. The initial construction segment, which is the sub- 
ject of our grant agreement with the Federal Government, is — I 
think it is 130 miles from Madera down to the Bakersfield area, 
north of Bakersfield. We stopped short of going into Bakersfield so 
we could work with that city to look at an additional alignment. 
So it is somewhere in the area of Wasco. At the moment I am for- 
getting the precise road that it stops at. That is the Central Valley 
segment, which will be the spine of the system. 

When we made the change in the business plan, we said we need 
to connect the Central Valley to the Silicon Valley. Let’s build no 
further south right now than we are building, which is why it 
seems a little odd to be stopping kind of in the middle of an almond 
orchard and turn around and connect to San Jose and San Fran- 
cisco. 

But what we also said in our business plan was that it really 
makes sense to enhance the service into San Francisco and to 
reach down to Bakersfield. That is an additional $2.9 billion, and 
we will be coming to the Congress and talking about the benefit of 
that connection because it generates $4.7 billion of additional rider- 
ship revenue. 

Mr. Denham. Thank you, sir. 

Mr. Richard. I am sorry. I did not mean to go on. 

Mr. Denham. I did not mean to cut you off. I want to hear much 
more about this, but I have gone over my time. 

Mr. Richard. And I apologize, but I am very happy to work with 
you on this because we think it will be an important enhancement. 

Mr. Denham. Thank you. 

Mr. Capuano? 

Mr. Capuano. I am going to defer to my California hosts and let 
them go first. 

Mr. Denham. Mr. Huffman, you are recognized for 5 minutes. 

Mr. Huffman. Appreciate that. Thank you. 

Thank you, Mr. Chairman, for having this hearing, and thanks 
to our terrific witnesses for joining us. 

I especially want to welcome you. Administrator Feinberg. It 
seems like just yesterday I was touring in Marin and Sonoma 
County on the Smart Rail project, which is an exciting project 
where our communities are bringing back commuter rail. Thanks 
to the support of your agency and others, that is going to be reality 
in just a couple of more months. It will open on day one as one of 
the safest passenger rail systems in the United States, again with 
your support for Positive Train Control, so thank you very much. 

I appreciate that Mr. Hunter in his remarks reminded us that 
there was another really big, transformative, and yet controversial 
project nearby. It happens to be the defining southern feature of 
my congressional district, the Golden Gate Bridge. What people 



16 


sometimes don’t appreciate, because it is such an iconic piece of in- 
frastructure now that is taken for granted, is that it was very con- 
troversial in its time. Over 2,000 lawsuits were filed to stop this 
project in the 1930s. It went through several different designs. 
They were all very controversial. There were huge cost overruns. 
Yet, if you went to my district today, or I would say anyplace else 
in California, and asked people if you would like to go backward, 
they would probably laugh at you. It has been a huge success. 

So when we talk about this project and the promise of high-speed 
rail, we should talk about cost, we should talk about budgets and 
plans and the challenges this project faces. But we should also 
think about the cost of inaction and the benefits it brings. 

So, Mr. Richard, I am especially grateful to have the conversa- 
tion with you at this point in the project’s history because in a 
prior life as a State legislator on the budget committee, I do re- 
member lots of conversations with your predecessor where I had 
lost confidence in the ability of California to realize the promise 
and the vision of high-speed rail. The project was in complete drift, 
and yet today construction is underway. Construction contracts are 
coming in under budget, and it does seem that through innovation 
and creativity we are poised to actually make this happen in Cali- 
fornia, and it is in no small part due to your leadership, so thank 
you for that. 

That doesn’t mean your critics have gone away, so I want to ask 
you about a couple of points that Mr. Flashman has very elo- 
quently laid out in his remarks. Specifically — and these are points 
that we have heard for some time now as criticisms of the project — 
the assertion that financially you can’t get there from here because 
of limitations and constraints on funding in Prop. lA and the Fed- 
eral funding, that when you add it all up, the dollars just don’t con- 
nect and you can’t get there from here. 

And the second one is the impossibility of achieving the speed 
and travel times that have been promised, I believe, between 
Wasco and San Jose. 

So I want to give you a chance to speak directly to those claims 
that have been levied, and also to the extent you can because, 
again, these are not new claims — they have been part of litiga- 
tion — what the courts have said as well about these matters. 

Mr. Richard. Thank you. Congressman. Thank you for your kind 
remark there. 

There are several things I would say. First of all, when the vot- 
ers in 2008 went to the ballot, the legislature put before them a 
bond measure that said to them we want to get started on high- 
speed rail. In fact, the opening line was it is the intent of the peo- 
ple of California to build a high-speed rail system. But that bond 
measure, by its terms, made it clear that the money was not all 
in hand. There was $9 billion. By law, it required to be matched, 
so it could only be half of what could be spent. They talked about 
Federal money. There was no Federal program. There was no stim- 
ulus program. It hadn’t been created yet. 

They talked about saved money. There was no other saved 
money. They talked about the private sector. The private sector has 
historically done this at certain points in the project and in history 



17 


around the world, but basically the people were told this is a down 
payment, we are going to get started. 

Sometimes people say to me, well, you are admitting that you 
don’t have all the money in hand to build the entire system right 
now. That is true. In Ms. Lofgren’s district, they are building BART 
to San Jose. I helped start that project 15 years ago. They are still 
finding pieces of the money to finish it. That is just the nature of 
transportation projects. We build them in pieces. 

The legislature in its wisdom, and the people in their wisdom, 
said we understand you are going to build this in segments. We 
want them to be usable segments. We don’t want our money wast- 
ed on something that isn’t going to have value. So the courts have 
basically found that we could do that. 

I am sorry, I don’t mean to go over on this, but we have the dol- 
lars in hand between the bond funding, the Federal money, and the 
Cap and Trade money we have been allocated, to build an initial 
operating segment from the Central Valley to the Silicon Valley. 
Are there some uncertainties about that? There are. Do we think 
they are being resolved? We think they are being resolved favor- 
ably, and we have confidence we can build it, and the independent 
peer review group told the legislature that they think this is a fi- 
nancially responsible and constrained plan. 

Let me just stop there. I don’t want to go on and on, but I think 
I addressed the question of before. 

Mr. Huffman. Thank you, Mr. Richard. 

Mr. Denham. Mr. Farenthold, you are recognized for 5 minutes. 

Mr. Farenthold. Thank you very much. 

Administrator Feinberg, I would like to start with you. There is 
a high-speed rail project entirely privately funded going on in 
Texas, my home State, right now. They are looking at going from 
Houston to Dallas at an estimated cost of about $10 billion for the 
project cost. 

I understand things are more expensive in California. I just paid 
$3 for a Dr. Pepper here. But we are looking at money six times 
more expensive for a rail that isn’t even twice as long. Do you have 
any thoughts on the cost differential? And then I will pass that 
along to Mr. Richard as well, if he wants to. I will allow you to 
pump that to Mr. Richard if you would like to. 

Ms. Feinberg. Well, they are very different. The reality is they 
are just very different projects. I will let Mr. Richard weigh in on 
this, but there are more stations and more stops in California and 
a much longer distance that will be traveled. They are just fun- 
damentally different projects. But we have really enjoyed working 
with the folks in Texas who are working on this project, and we 
have very high hopes for success because I think that segment be- 
tween those two cities is a perfect example of where — a significant 
game changer for that economy and for people’s lives there. 

Mr. Farenthold. As a steward of the taxpayer dollars, I am con- 
cerned about the cost. 

Mr. Richard, if you would like to weigh in on that for a second, 
it would be appreciated. 

Mr. Richard. Congressman, this is a very complex State both 
geo-physically as well as economically. I had the chance one time 
to drive from Los Angeles up to Fresno and back to the bay area. 



18 


and I thought I wish everybody could do that drive with me and 
then ask the question why this costs so much. 

Over mountains, through ravines, through built-up urban areas, 
it is just a very complex topography. We have earthquake issues 
that, fortunately, you don’t have to deal with in Texas. I spent a 
lot of time in Texas in my youth. I worked at NASA as a kid. I 
think you are pretty flat down there in Texas compared to some of 
the area here. That is one of the big drivers. 

Mr. Farenthold. Let’s talk about land acquisition. 

Mr. Richard. Yes, sir. 

Mr. Farenthold. Where are you on that? Do you have the en- 
tire — do you have contracts for the entire route of the land? How 
much of that are you going to be able to get through negotiating 
with the landowners? What are we looking at with respect to exer- 
cising eminent domain? 

Mr. Richard. Well, I stated. Congressman, that I felt that if we 
could get all of the land that we need without ever having to resort 
to eminent domain, that that should be our policy and that should 
be our approach. Unfortunately, that is not the reality. Part of the 
reason it wasn’t the reality is that when we had litigation and so 
forth, we actually had lawyers running around telling people don’t 
settle with these guys because we think the project is going to go 
away, and that was really unfortunate. We ended up having to go 
to eminent domain in some of those situations. 

But we have about 1,300 parcels that we need to get, I think 
1,100 parcels for the first 130 miles. I think we are about 700- 
some-odd into that. 

Mr. Farenthold. So barely halfway. 

Mr. Richard. That is why the working capital request that we 
could accelerate that. 

Mr. Farenthold. That is more of a rural segment. You sound 
like you are cutting through some urban areas like San Francisco. 

Mr. Richard. But there are some important urban areas there. 
In Fresno we moved an entire food processing operation, but most 
of it is rural. You are right. 

Mr. Farenthold. And how much of this is going to be elevated 
versus at grade? 

Mr. Richard. We are going to do as much at grade as possible. 
One of the reasons that some of the contract bids came in below 
our estimates were that their engineers were able to suggest areas 
of at grade. I don’t have the specifics in my head, but I would be 
happy to supply that to you and the committee. 

Mr. Farenthold. That is fine. I would point out the entire Texas 
system is above grade. It is either in a viaduct type of arrangement 
or on a berm. I wonder how much going over people’s property 
might not be worth looking at. 

Finally, I only have 30 seconds left, and I apologize for not being 
an expert on California geography. I can understand there being a 
lot of people who might want to go from L.A. to San Francisco. You 
have a fair amount of options once you get there of how to get 
around the city, on the BART or an Uber lift. But from Madera to 
Bakersfield, you get there, what do you do when you get there, and 
what do you think of how that is going to affect your ridership de- 



19 


mand to fund your ongoing operating over numerous years until 
you get the endpoints built? 

Mr. Richard. I am tempted to refer you to the House Majority 
Leader about Bakersfield. 

Mr. Farenthold. I do not want to get crossways. I have been to 
Bakersfield, so I know there is not a lot of — there is no subway in 
Bakersfield. 

Mr. Richard. I think the main point, very quickly. Congressman, 
is that the legislature and the people in California deliberately said 
we want you to connect areas of the State. We are not building a 
straight line from San Francisco to L.A. We are going through the 
Central Valley. It is an area that has been left behind. 

Just very quickly, three of the five most impoverished areas in 
the United States are in the Central Valley in California, despite 
the great wealth that we have there. Twenty-one percent of the 
kids have asthma. It has three of the five worst air quality dis- 
tricts. And if you want to get from Fresno to Los Angeles by air, 
it is $700. It is an area that has been disconnected from the rest 
of the State. 

The excitement around our opportunity to connect the Central 
Valley and Silicon Valley, which is bursting at the seams, and to 
move not only housing but investment and manufacturing facilities 
there is enormous, and it gives diversity to the Central Valley. So 
there is a real strong economic reason why this program is struc- 
tured the way it is, and I think we are going to see a tremendous 
uplift in the economy of the Central Valley that is going to benefit 
people far and wide. 

Mr. Farenthold. Thank you, Mr. Richard. 

Mr. Denham. Ms. Lofgren? 

Ms. Lofgren. Thank you. Thank you, Mr. Chairman, for allow- 
ing me to participate in this hearing. 

It has already been said that it is not just what we are building 
but what would happen if we didn’t build this, and I think it is im- 
portant to keep that in mind. California is going to have a lot of 
growth. It needs to be accommodated. To try to meet that growth 
with airports and roads is just not viable. 

I know also, before I ever ran for Congress, I was in local govern- 
ment, and I remember building big projects. It is easy to criticize, 
harder to build. When we built Highway 85 down in Santa Clara 
County, the section from 101 to 280 was done and it took decades 
to get 280 to the southern 101. So you do these in pieces, and that 
is just the way big construction projects go. 

I just want to mention the 2016 draft business plan that was ap- 
proved, because I think it is a knockout achievement. Not only does 
it reduce the cost for the initial segment, it is easier to get through 
that mountain range than the southern mountain range, and it will 
be so important economically not only for Silicon Valley and my 
district but I think also in the Central Valley. 

In San Jose, traffic congestion is through the roof, and affordable 
housing is a big challenge. The median price of a house in the bay 
area in June was $751,000. The median price of a house in Santa 
Clara County last month was $1,045 million. So we are bursting 
at the seams, and the capacity to connect the Central Valley and 
Silicon Valley is going to help Silicon Valley survive, and it is also 



20 


going to provide tremendous job opportunities for people who live 
in the Central Valley. It will take an hour to get from Merced to 
San Jose. My chief of staff lives in San Jose and it takes her longer 
to get from parts of San Jose to downtown. 

So this is really going to be an economic lift-up for our State, and 
it is worth remembering that most of the job growth in the State 
of California actually occurred in Silicon Valley. We got plenty of 
jobs, and we are not shy about wanting them to go to people in 
other regions. 

So, as someone said, there is high poverty in the Central Valley. 
I chair the California Democratic Delegation. Our delegation is 
very supportive of this high-speed rail project. We have cochairs of 
the Congressional High-Speed Rail Caucus, Jim Costa, John 
Larson and myself. So we are really very pleased with what is hap- 
pening here. 

Now, I guess we have a second round of questions coming up, but 
one of the things that I wanted to ask — and I think it is great that 
Ms. Feinberg is here. Thank you for coming once again. Mr. 
Denham, the chairman, asked for the California High-Speed Rail 
Authority’s agreement with the FRA to be reviewed by the GAO 
last year, and it is my understanding that they have concluded 
that the California High-Speed Rail Authority has complied with 
its agreement with the FRA. Do you have any disagreement with 
that GAO conclusion? 

Ms. Feinberg. I don’t. In fact, the GAO has looked into Cali- 
fornia high-speed rail several times. I think it is now the most in- 
vestigated and most audited project in U.S. history. I don’t know 
if that is something to be proud of or not, but I think it is worth 
being proud of that they have succeeded and the GAO has never 
found a significant issue. 

Ms. Lofgren. So it is your testimony, then, that not only is the 
California High-Speed Rail Authority currently in compliance but 
they have been in compliance. 

Ms. Feinberg. Yes. 

Ms. Lofgren. Thank you very much. 

You know, I was interested, Mr. Richard and Mr. Hartnett — this 
is really an issue for up the peninsula, not in my district, but the 
intrusion on blended rail. We know that there has been an epi- 
demic of suicides among teenagers, high school students, in the 
mid-peninsula area. I was pleased to hear that you are going to 
have some intrusion devices. Is it your belief that with the ability 
to stop these trains faster and these intrusion technologies, that we 
might have a better chance of saving these young lives? 

Mr. Hartnett. Together with fencing, there will be additional 
fencing that will help for those who have a spur of the moment de- 
sire, so the fencing will be just a natural barrier. I can’t speak to 
the high-speed rail intrusion devices, but there is experimentation 
with a variety of methods to detect folks going on the tracks, in- 
cluding video feeds. 

But in that area of youth suicide, we have worked very closely 
with the school districts and the communities on the broader 
issues, which we have to continue to do because the ultimate solu- 
tion isn’t going to come from fencing and devices. 

Ms. Lofgren. No. It will come from the children themselves. 



21 


Mr. Hartnett. So that is something we continue to work on. 

Ms. Lofgren. Thank you. 

I see my time has expired, Mr. Chairman. 

Mr. Denham. Thank you, Ms. Lofgren. 

Mr. LaMalfa? 

Mr. LaMalfa. Thank you, Mr. Chairman and panelists. I appre- 
ciate it. 

What the voters voted for in 2008 was a $33 billion project, a 
high-speed train, one train, not switching trains, from S.F. to L.A. 
A year later the number was adjusted up to approximately $42 or 
$43 billion, adjusted beyond what the voters saw, beyond what the 
voters approved. And then finally, after much agitating from the 
State legislature, we had a hearing in November of 2011 where the 
admission was that there wasn’t going to be 1 million jobs created 
by high-speed rail but something called 1 million job years, and 
that the cost was no longer just $33 or $43 billion, it was $98.5 bil- 
lion, triple the price. 

Now, if I am seeking to, let’s say, enclose my garage and build 
a bathroom inside, I might get a bid for $33,000, not $33 million, 
and they tell me the price a few months later is $43,000, and then 
when the trucks show up and they start construction they say it 
is $98,500 — ^you can see where I am moving the decimal points 
here — I am going to say that is a breach of contract. I am going 
to tell you to take a flying leap, especially since the completion date 
initially was 2020 and now it is 2033. So I don’t get my garage en- 
closed for an additional double or more of the time. 

This is the recent contract with the voters of California. It is why 
I carried two bills as a new State senator, SB-22, to say don’t 
spend any money until you actually have a plan. You don’t even 
have a plan yet on how you are going to go through Bakersfield, 
how you are going to go through the Tehachapis, where the funding 
will come from. You are still $55 billion short of the change projec- 
tion, down to $68 billion after the scramble, from $98.5 up to $118 
scared everybody for a blended system. 

So this is indeed something that the taxpayers should be looking 
at and saying we have been taken to the cleaners on this. That is 
why my second bill was SB-95 saying put it back on the ballot and 
ask the voters once again what they think of something that is tri- 
ple the price, that isn’t meeting the mark anywhere near the time, 
nor are the so-called environmental benefits of this, of the green 
project, will be saving C02. I almost laughed when I heard one of 
the solutions during construction would be that they are going to 
plant trees to offset the concrete and the construction equipment 
being used in there, since we are worried about C02 these days. 

So, Mr. Flashman, I want to drill down with you on that for a 
moment here. Of the different projects — there are green projects, 
there are Cap and Trade replacement projects — what are the ones 
that are the most eligible, the highest priority, the most bang for 
the buck? Briefly, please. 

Mr. Flashman. I am not sure I can name any one specific 
project, but the aim of AB-32, which is what set up the whole idea 
of doing a Cap and Trade project, was to get greenhouse gas emis- 
sions down to 1990 levels by 2020. 



22 


Mr. LaMalfa. Will high-speed rail do anything to help that by 
2020 or 20-anything? 

Mr. Flashman. Well, at some point maybe it will. It certainly 
can’t by 2020. It is still going to be under construction in 2020. It 
won’t actually start operating — at this point they are estimating 
2025. 

Mr. LaMalfa. So should high-speed rail be pulling these green- 
house gas option funds, then? 

Mr. Flashman. Well, I am handling the lawsuit which basically 
is saying it should not. 

Mr. LaMalfa. OK. So if we are looking at the benefit, perhaps, 
of high-speed rail in this and greenhouse gas and the option, the 
most recent one was somewhere around $8 million I think was the 
auction generation 

Mr. Flashman. That is correct. 

Mr. LaMalfa. The projections I have is that for the $55 billion 
funding gap, since there is no Federal money coming into it, there 
is no private money coming into it, it would take about maybe over 
6,000 years to pay off the funding gap with the high-speed rail 
new-found money — excuse me — coming from the greenhouse gas 
options. 

Mr. Flashman. Obviously, if it is going at the current rate, it is 
not going to be very much help at all. I am sure the Governor 
would like to see Cap and Trade extended. He is talking about 
sending it at least to 2030, maybe to 2050. If they could extend it 
to 2050, they hope they could securitize it. 

Mr. LaMalfa. But at this rate of options, it is not going to pull 
a whole lot. Thank you. 

Mr. Hartnett, currently you don’t have 120-mile-an-hour at-grade 
trains running with your Caltrain system? 

Mr. Hartnett. That is correct. 

Mr. LaMalfa. But you expect you will have 120-mile-an-hour at- 
grade crossing with high-speed rail with Caltrain? 

Mr. Hartnett. Well, high-speed rail will determine the speed, 
but we have tested out in our conceptual analysis the blended sys- 
tem that they can operate at 110 mph 

Mr. LaMalfa. How can you fence for an area for people to not 
have access to 120-mile-an-hour trains, especially when you come 
to an at-grade crossing where cars are, people are, pedestrians are? 
How do you fence the whole area for a rail going across a highway 
or road or street? 

Mr. Hartnett. Well, fencing doesn’t go across the grade separa- 
tions. 

Mr. LaMalfa. At-grade I am saying. 

Mr. Hartnett. And it doesn’t go across the at-grade crossings. 
We have gates, and there would be an opportunity to establish 
quad gates that will be down well before the 

Mr. LaMalfa. How easy is it for a pedestrian to pass between 
those gates and run out on the track? 

Mr. Hartnett. It is not easy at all to go through the quad gates. 

Mr. LaMalfa. For a pedestrian? 

Mr. Hartnett. Correct. 

Mr. LaMalfa. It doesn’t take a limbo champion to go underneath 
one of those gates. 



23 


Mr. Hartnett. The quad gates are set up to provide maximum 
security for 

Mr. LaMalfa. For automobiles and motorcycles. 

Mr. Hartnett. Not just for automobiles and motorcycles; for pe- 
destrians. 

Mr. LaMalfa. So a pedestrian will not be able to penetrate the 
tracks easily at an at-grade crossing? 

Mr. Hartnett. They will not be able to do so easily. Like with 
anything else, if a pedestrian wants to come off a platform or other- 
wise get onto the tracks, it will be possible to do. 

Mr. LaMalfa. Sorry, the time. I would love to see an illustration 
of how a pedestrian cannot go around those gates at an at-grade 
crossing. 

Thank you, Mr. Chairman. 

Mr. Denham. And we would ask you to submit any plans or 
drawings you might have to the committee. 

Mr. Capuano, you are recognized for 5 minutes. 

Mr. Capuano. Thank you, Mr. Chairman. 

I want to thank the panel for your thoughtful comments. 

Before I begin, I would also like to submit a letter for the record 
from Representative Eshoo, who couldn’t be with us today, who is 
in support of the project. 

Mr. Denham. Without objection. 

[The letter from Congresswoman Anna G. Eshoo follows:] 





c^ ^t^i^eden^£u/ed 

^ ^ 9 ! 

^i^iA£i!&n£4 


August 29/ 2016 

The Honorable Jeff Denham/ Chairman 

Subcommittee on Railroads/ Pipelines/ 5 J. Hazardous Materials 
House Committee on Transportation ^ Infrastructure 
2251 Rayburn House Office Building 
Washington/ D.C. 20515 

The Honorable Michael E. Capuano/ Ranking Member 
Subcommittee on Railroads/ Pipelines/ & Hazardous Materials 
House Committee on Transportation Infrastructure 
2251 Rayburn House Office Building 
Washington/ D.C. 20515 

Dear Chairman Denham and Ranking Member Capuano/ 

Thank you for the opportunity to submit a statement for today s hearing regarding California 
High-Speed Rail. Because you chose to hold this field hearing in downtown San Francisco / 1 
believe it is important for the Subcommittee to understand the important partnership 
between the California H igh-Speed Rail Authority and Caltraiu/ our local commuter rail 
which serves thousands of San Francisco residents daily and is the spine of our 
transportation system throughout San Mateo County and Silicon Valley. 


Passenger rail service has operated on the San Francisco to San Jose corridor for over 150 
yearS/ but without a substantial upgrade/ Caltrain will not be able to cope with rapidly 
increasing demand. Today) our highways are choked with traffic and Caltrain operates well 
over 100% seated capacity. Ridership has more than doubled in the last decade and it is 
expected to double again over the next two dccadeS/ to more than 120/000 riders daily. 

This traffic and overcrowding of our Crains is a legitimate threat to the continued economic 
growth of Silicon Valley and the greater San Francisco Bay Area. Hundreds of our nation''s 
most innovative companies and startups rely on the Peninsula transportation system to get 
their employees to work. In a remarkable shift over the last decade/ approximately 40 percent 
of Caltrain riders now travel southbound from San Francisco to Silicon Valley/ on a 
commuter rail that was originally intended to primarily serve northbound commuters. 



25 


In order to meet this increasing demand and keep the Bay Area economy booming, Caltrain 
is moving forward with plans to electrify the San Francisco to San josc corridor. High- 
performance electric trains will operate cleaner/ faster/ and more frequently than current 
diesel models. By Z04O/ the project is epcpected to improve daily air quality on the corridor by 
over 97 percent/ reduce annual greenhouse gases by over 176/000 metric tons/ and take 619/OOO 
daily vehicle miles off the region''s roadways. In this effort/ the California High-Speed Rail 
Authority is a critical partner because electrification of Caltrain will allow the corridor to 
accommodate future high-speed trains. 

In zoii/ I joined with State Senator Joe Simitian and Assemblyman Rich Cordon to offer an 
alternative to the four-track proposal by the High-Speed Rail Authority which would have 
been prohibitively expensive and would have corn up communities on the Peninsula. Our 
plan/ known as the "blended system/" will upgrade the existing Caltrain corridor/ allowing 
high-speed rail trains to operate on it at one-third the cost of the original plan. 

Fi\^ years after we first proposed the blended system/ this important project is moving 
forward. Contracts for the Caltrain electrification project were awarded earlier this month 
and construction is expected to begin early next year. This places the project on schedule for 
completion in 1020. The project enjoys support and funding from the three counties it travels 
through; the Metropolitan Transportation Commission (MTC); the State of California; and 
the Administration. 

Silicon Valley is one of our country's top economic engines and its continued growth depends 
on the ability of local infrastructure to accommodate it. The partnership between Caltrain 
and High-Speed Rail will provide substantial regional benefits while enabling future 
integration of high-speed trains at a lower cost than what was initially proposed. 

As you conduct your oversight hearing today in San Francisco / 1 encourage the Subcommittee 
to consider the important rote that High-Speed Rail will play in ensuring that the Bay Area 
economy can continue to grow. 


Most gratefully/ 



-A^ember of Congress 



26 


Mr. Capuano. Thank you. 

I want to stay away from the local issues, to be perfectly honest, 
as far as safety and getting access to rail. Good luck. You couldn’t 
keep me off the train tracks when I was a kid. You are not going 
to be able to keep people off who want to get on. You do the best 
you can, God bless you, but that is not a Mg issue to me because 
I know you are trying the best you can, but you are not going to 
do it. 

I am just curious, though, and I really don’t know the geography 
of California, but on the presumption that — I am not even going to 
use San Francisco — San Jose is a job center to a certain extent, 
San Francisco being at the end of the line, once this high-speed rail 
is built, let’s assume it can do everything you want it to do, go the 
speed you want, have the stops you have, give me an idea of where 
would I be if I got off the train after about 45 minutes on the train, 
approximately? 

Mr. Richard. Starting in San Jose? 

Mr. Capuano. Yes. I assume you will have a stop at San Jose. 

Mr. Richard. Yes, we are. 

Mr. Capuano. Approximately. 

Mr. Richard. I would say 55 minutes from San Jose you will be 
in Fresno in a car on your way to Yosemite. 

Mr. Capuano. OK, and I really don’t know. Has anybody consid- 
ered the suburbs of Fresno as a bedroom community to San Jose? 
Did anybody consider that today? 

Mr. Richard. Actually, today, it is not considered today, but I 
will tell you that there are people in San Jose that 

Mr. Capuano. The reason I ask is because I am sure that some 
people do that commute. 

Mr. Richard. Yes. 

Mr. Capuano. The average person is more than willing, and I am 
sure they do it here like they do everywhere else, to commute give- 
or-take an hour back and forth to work. The whole idea of high- 
speed rail is, yes, to connect San Francisco and L.A., that is all well 
and good. But for me, it is more about providing affordable housing 
for people who want to work, because you cannot afford it here. 
You might be able to afford it 45 minutes south of San Jose, wher- 
ever it might be, in a town now where property values are half 
that, or whatever they might be. It is no different here than it is 
on the east coast. 

So for me, I actually think connections to suburban communities 
is of more value to this rail system than San Francisco to L.A. To 
be honest, 2 hours and 40 minutes, good luck. I just took the train 
from Boston to Philly, and we allegedly hit 150 miles an hour a few 
times, and maybe we did, maybe we didn’t, but we hit every stop 
on time. It was a great ride. I am glad I did it, but it was about 
5 hours. I think you will be able to do better, but you don’t have 
the same problems we have with curving track and the like. We 
have other problems that would take a lot of money to address. 

But either way, affordable housing for workers is one of the big- 
gest problems we have in Boston, and keeping our talented young 
people to fuel our economy is hard because they can’t afford hous- 
ing. It is kind of simple. And honestly, you are not getting many 
young people either because they can’t afford to come here. That 



27 


being the case, anything you can do, we can do, this country can 
do to maintain the economic centers of our country is a good thing. 

Now, whether this particular project is it, I will leave that to the 
people of California to decide, because though there is a lot of Fed- 
eral money here, it is mostly State money, and it is your preroga- 
tive. 

We had a project that is similar. By the way, this is not the most 
investigated project in the history of the country. The Big Dig is. 

[Laughter.] 

Mr. Capuano. But let me tell you, criticize it all you want, it 
works. It did exactly what it said it was going to do. It didn’t solve 
all of our problems, but it solved the problem it was meant to ad- 
dress. It cost a lot of money, and more than 60 percent of it was 
State money. And, by the way, when we ran over, here is how we 
funded it. We borrowed against future Federal highway funds. 
Every year for about 10 years after that, we took several hundred 
million dollars of Federal money — that we would have otherwise 
used to build other things — to pay off the debt. So the concept of 
advanced payments is not new. Call it a different name. It is a 
choice by the people of California as to what is the most important 
thing for them, which is why I won’t get into whether this is or 
isn’t the best use for that. That is up to you. 

We thought it was the best use for the Big Dig. Now, as a former 
mayor at the time, my city got stuck and had nothing for a while. 
In the long run, over time, it was worth it. But I say that more 
as a lesson to be learned. This is not the first big project, it is not 
even the most recent big project. It is not the project with all the 
problems that you ever had. 

Land acquisition? I come from the most densely populated area 
of the country. Good luck with land acquisition. I can’t imagine 
that there is a farmer — and by the way, Mr. Flashman, that is how 
you say it, “fahmer” 

[Laughter.] 

Mr. Capuano [continuing]. In the Central Valley that would be 
happy to part with his land any more than my triple decker in Dor- 
chester is happy to part with theirs. So, yes, land acquisition is a 
difficult thing and is absolutely necessary. 

Whether you get this project done or not on the timescale you 
want, good luck. I support it in general. I will do what I can to 
help, within reason. I am fighting for those same Federal dollars 
for my Northeast Corridor, and I want a high-speed rail from Bos- 
ton to Springfield to do all that stuff we just talked about. 

I want to warn everybody here, when it comes to Federal dollars, 
the pie is shrinking. The struggle for those dollars is growing. 
Every city wants a subway now. It used to be a handful. Now we 
all do. Everybody wants a commuter rail system. Only used to be 
a handful. High-speed rail is the next big thing. We used to have 
one, not really high-speed but kind of a medium-speed rail, called 
Amtrak in the Northeast Corridor, from Boston to Washington, the 
only rail corridor in the country that makes money, the only one. 
Why? Density of population. And it is not people going from Boston 
to DC, Boston to New York, New York to Philly, Philly to DC, DC 
to Baltimore. It is those middle stops that make the system. 



28 


And I say all that not because you don’t know it, but I think it 
is important for people to understand that when we talk about 
these massive projects, it is not just one big massive project we are 
talking about, but we are actually talking about a series of smaller 
projects that are tethered together. You are not going to make 
money from San Francisco to L.A., but you might make money 
from San Francisco to San Jose, San Jose to Fresno, Fresno to 
whatever bedroom community it might be. Again, I don’t know the 
geography of California that well. 

I would warn people to think of it in those terms. Again, to do 
it or not do it. That is your decision, because every dollar we spend 
in the Federal Government, you have to match 3 or 4 to 1. Federal 
dollars are not going to save you, but Federal dollars will help. 

With that, I really don’t have too many questions. I just want to 
make sure that I understood this project for what it was. I did have 
one question, but I will wait for the second round because I have 
already gone over. Thank you, Mr. Chairman. I usually don’t pay 
attention to the clock. 

Mr. Denham. You don’t usually pay attention, but I have to say 
that normally you are way under the guidelines, so a lot of discre- 
tion here. You are always way too kind with giving your time to 
other Members. 

That concludes our first round, and we do have time for a second 
round. I would like to start off the same way that I said in many 
of my conversations with Mr. Capuano as we have looked at 
projects around the country, as well as I have stated in every hear- 
ing that we have had now: I support high-speed rail. We are going 
to have high-speed rail in this country. We have a higher speed rail 
in Florida. I have a great promise on the Texas private effort. I 
think at some point we have to get high-speed rail in the Northeast 
Corridor with the huge ridership that we have there. 

My concern here is that there is a commitment that has been 
made to the voters. It was a $33 billion project. And at some point 
we have to bring some trust back into Government. We have an ob- 
ligation for Government to do what it said it was going to do. And 
I get it, there were cost overruns in the Bay Bridge, there were cost 
overruns in Golden Gate Bridge. This was an issue passed by vot- 
ers, and I think we have to have priorities in this State, and we 
have to have some trust in Government. We need to do what we 
say we are going to do or it should go back before the voters. 

This was started in the Central Valley. It was written into Prop. 
lA. Far too often, initiatives are passed and the investment gets 
done in the bay area, the investment gets done in L.A., and yes, 
the high unemployment continues to go on in the Central Valley 
because we don’t put the money into infrastructure in the Central 
Valley. 

So this was done there, putting the Central Valley in this first, 
but the concern is that all of the money is going to be spent and 
you could be stuck in a field with somewhere between Shatter and 
Wasco and somewhere further down the road in Madera, and we 
are out of money. That is the last thing we want in the Central 
Valley. We don’t want to have something that has no riders, that 
has no train, that has no future investment, only to wait for dec- 
ades hoping that maybe we can take some money from the North- 



29 


east Corridor and hold you guys up, or we can take money some- 
where else, from another State, to get this project moving along. 

So this has more to do with transparency and accountability than 
I think any of us. Republican or Democrat, on whether we want 
more transportation in this State or in this country. 

Let me now jump to the issue of jobs. Labor in my district has 
continuously asked me, on a variety of different projects, where are 
the local jobs? So, Mr. Richard, before this hearing started we had 
talked about some of the jobs that have started in 2015 and now 
this year. I would like for you to provide for this committee, and 
I will follow up with a written request, but specifically where those 
jobs are. 

And to Mr. Hunter, the question has been with PLAs on a num- 
ber of different projects in our area, labor in our area has ques- 
tioned whether or not it has been a local job. So a PLA will be put 
in place by the letter of the law. The contract is granted, only to 
find out that all of the labor has been brought in from out of State 
or out of the area and living in a hotel room under an address in 
the Central Valley, showing Central Valley jobs. The people in my 
district still don’t get those jobs. 

So first if you could comment on that, and Mr. Richard, you don’t 
need to comment. I would just like a followup just to let us know 
where those jobs are and who is taking them. 

Mr. Hunter, you mentioned Billy Powell. The IBEW was the very 
union that asked me specifically about French camp and the PLAs, 
the future PLAs there and whether or not those would be local jobs 
or whether or not, like high-speed rail, was their response, would 
we have out-of-the-area jobs. 

Mr. Hunter. Measure our L.A. County $40 billion half-cent sales 
tax for a transit system because we had none. Everybody wanted 
the local people in there. They wanted no tax on their sales. We 
are not getting it from the State or the Federal Government. We 
negotiated an agreement for the percentage of workers to be in this 
from the L.A. County. Just like this agreement, we negotiated pref- 
erence for kids in the foster care system, for veterans, and for peo- 
ple who were on social services. 

These contractors are private contractors. They are going to use 
the least amount of people. They are going to do it in the least 
amount of time. We have no seniority. They want the most stream- 
lined workforce. We negotiated at the end of this agreement a pref- 
erence for zip codes from the Central Valley. I myself have been up 
and down from the Central Valley 

Mr. Denham. But specifically your members had expressed con- 
cern that while you enter a zip code, you could be living in a hotel 
room or be a new resident to the area using a local zip code. I am 
almost out of time. 

Mr. Hunter. I am aware of none of that. We looked pretty close- 
ly. The people who are on the books live in the zip codes of the 
area, Merced and Fresno. 

Mr. Denham. Thank you. I look forward to a followup. I would 
just like to point out for the record that a big part of our, in the 
Central Valley, our high unemployment is due to the shortage of 
water. Temperance Flat, a $2.5 billion project to provide over 3,000 
jobs for members of yours. Shasta Dam, $1.3 billion, our biggest 



30 


bang for the buck in California, 1,400 jobs. Over 4,000 jobs could 
have been done if we had waited for 7 years on this project. As 
well, BART expansion, 1,400 jobs; ACE expansion in my area, 
1,000 jobs; less than $2 billion for those two projects. Caltrain’s Al- 
ameda County, 235 jobs. We are talking over 4,000 jobs just in rail 
projects that are on the books right now that could have all been 
done during this same time period. Those could be jobs that — 
again, this is not an issue of labor. It is an issue of jobs today. 

Mr. Capuano? 

[No response.] 

Mr. Denham. Mr. Huffman, you are recognized for 5 minutes. 

Mr. Huffman. Thank you. 

Mr. Richard, I want to go back to you about the financing issue. 
I know that one of the criticisms of your plans and the Governor’s 
involvement in the plans has been the reliance on credit from the 
Cap and Trade system under AB-32. A lot of folks in the months 
leading up to this hearing have claimed that that is an unreliable 
source of revenue, maybe even an unlawful source of revenue, and 
we know that the fossil fuel industry has been putting on a full 
court press to allow the very authority from which it derives, AB- 
32, to simply expire and not be renewed. 

But it seems to me that with developments in Sacramento over 
the past week, we are having a bit of a different conversation now. 
The fossil fuel industry lost and we are moving forward not just 
with the continuation of AB-32 authority but actually we are dou- 
bling down on climate leadership, raising the bar even higher and 
declining to join the fossil fuel industry on the road backward to 
perdition. 

So let me ask you now as we sit here today, what is your assess- 
ment of the reliability and the stability of that greenhouse gas pol- 
icy framework and the Cap and Trade revenues that are a critical 
part of your long-term plans? 

Mr. Richard. First of all, as you know as one of the leading envi- 
ronmental voices in the California Legislature before you became 
one of the leading ones in the U.S. Congress, California has led the 
globe in terms of action on climate change, and our Governor and 
our legislature have just recommitted to that last week with an ex- 
tension of the basic law, which was Assembly Bill 32. Now Senate 
Bill 32 by the same author has, as you said, essentially tightened 
down on the limits. Instead of meeting the 1990 limits by 2020, we 
are now talking about 40 percent below the 1990 limits by 2030. 

Industry, and I think even the oil industry, knows that the best 
way to get there is through market mechanisms and not just rely 
on command and control. I have had this conversation with many 
of my conservative Republican friends. You want cap and trade to 
continue because you do not want to have everything be simply 
coming out of the error sources as a command that you will, smoke- 
stack by smokestack, reduce these emissions. 

So I am very confident that with the action of the legislature last 
week and the bill signed by the Governor, I think it will now turn 
the dialogue back to the extension of the market mechanism of cap 
and trade as a way to help our businesses and industry meet these 
standards, which we will meet one way or another. But the market 
mechanism provides a very effective tool for them. 



31 


We have already gotten about a half-a-billion dollars from the 
Cap and Trade Program this year, even before the recent auctions 
that were, in fact, disappointing. But I am not an expert on this 
and this is not an official State pronouncement, but the things that 
I read from people are that the uncertainty around these issues 
was one of the big contributors to people holding back from partici- 
pating in these markets. So let’s see what happens going forward. 

But today sitting here, I can say to you I have great confidence 
Cap and Trade will be extended, and I think it will be a successful 
program, as it has been. 

Mr. Huffman. And in the time that I have remaining, since we 
haven’t covered this specifically yet, could you just speak to the 
greenhouse gas reduction benefits that should accrue to the State 
of California if your vision of this project is realized? 

Mr. Richard. Very quickly, one of the interesting things about 
California is we are the exact opposite of the rest of the country. 
The rest of the country, electric generation emissions are about 43, 
45 percent of carbon emissions. In California, they are 22 percent. 
The rest of the country, transportation is in the 20-percent contrib- 
utor. In California, it is in the 40s. 

The only way we are going to meet our climate goals for Cap and 
Trade is basically to address the transportation sector, and that 
means the electrification of the transportation sector, not just elec- 
tric vehicles, in which we lead the Nation, but regional and state- 
wide rail systems. And what we are doing with high-speed rail — 
and again, I go back to the point that this is not just about high- 
speed trains. It is our total investment in the electrification of 
State, regional, and local rail systems. It is going to put an enor- 
mous dent in carbon emissions. 

High-speed rail has been the glue. We have been the last funding 
source for the Caltrain electrification, the last funding source for 
BART car rehabilitation, the last funding source for the L.A. Metro 
run-through tracks. So we are basically on the forefront of electri- 
fying California’s transportation system. That is what will help us 
achieve our carbon goals. 

Mr. Huffman. Thank you, and I yield back. 

Mr. Denham. Thank you, Mr. Huffman. 

Mr. Farenthold? 

Mr. Farenthold. Thank you very much. 

Mr. Richard, I want to go back a little bit to the eminent domain 
and the funding question for a second. You said you have been able 
to negotiate purchases of roughly half of the land that you will 
need. Do you have an estimate of what the — are the cost estimates 
still in line, or because you are going to have to use eminent do- 
main, are the cost estimates going to go up? 

I ask this question because recently in the district that I rep- 
resent we had a relatively large bridge project that ran through an 
economically disadvantaged community in the district, and part of 
the negotiation for this and avoiding potential lawsuits was that 
despite the eminent domain requirement that we pay fair market 
value for the property that was taken, some of these homes were 
below, well below the cost of what they could be replaced at. 

Do you foresee running into this, and has this been included in 
some of your cost calculations? So rather than just purchasing their 



32 


home, an expense associated with relocating, long-term rent sub- 
sidies or subsidies of purchasing a more expensive home because 
there are no homes at that cost range. 

Mr. Richard. Congressman, you raise a really critically impor- 
tant point. While I don’t know all the different mechanisms we use, 
and I will be happy to supplement the record with that, the essen- 
tial point is the right one. It has been a real tragedy that, as we 
have gone out to acquire people’s property and we are limited le- 
gally to paying fair market value, many parts of the State have not 
recovered yet in terms of the downturn in the housing markets 
that occurred, and taking somebody’s property at today’s fair mar- 
ket value, which is less than what it was in 2008, seems manifestly 
unfair. 

I can tell you that we have done everything we can to try to be 
aggressive in using tools to be fair with people, and we have also 
done things, particularly with our farmers, where what we have 
said to them is we will be quite liberal in looking at the impact on 
your property if we are only taking a portion of it. So, for example, 
we have 

Mr. Farenthold. I understand the issues, and I want to ask you 
a couple of other questions. 

Mr. Richard. I am sorry, sir. 

Mr. Farenthold. It just runs the cost of these things up, and 
it is very tough. 

Mr. Richard. It is. 

Mr. Farenthold. I want to ask Mr. Hartnett a question real 
quick. We talked a little bit about sharing track with the high- 
speed rail and your commuter rail. I worry about this. I am not 
sure you — maybe you did it in your testimony. Are we going to drop 
the high-speed rail down to your standard commuter rail speeds, 
or are we going to have different speeds of trains on these tracks? 

Mr. Hartnett. They will be able to go faster than our trains, but 
we also have built into the blended system approach passing 
tracks. So certainly they are not stopping at all our stations. It is 
designated to be 

Mr. Farenthold. Because to me this seems like a scheduling 
nightmare. I mean, I am not a regular train rider, if you don’t 
count the Washington Metro, but they are never on time. 

Mr. Hartnett. Actually, we don’t foresee it as a problem. We 
have already studied it. There is further scheduling work that will 
be done. But with our ability to schedule down even without pass- 
ing tracks, the blended system can be accommodated. There will be 
passing tracks, so that will enhance the ability 

Mr. Farenthold. I am going to reserve the right to remain skep- 
tical of that. We will see, and I am just going to shake my head 
because I expect you will be coming back to Uncle Sam for some 
more money. 

If you will allow me, Mr. Chairman, I want to digress for my last 
minute of questioning since I have Administrator Feinberg here. I 
just wanted to ask her if the Texas high-speed rail project that we 
are talking about between Houston and Dallas is currently going 
through some environmental studies. Can you give me an update 
on the project and how those studies are coming in the last 30 sec- 
onds I have here? 



33 


Ms. Feinberg. I will be happy to. The last time I spoke to you, 
I believe that the draft environmental work should be done by the 
end of 2016. I believe it is the fall of 2016. It will be in the coming 
months. I believe that is the latest report we have on this, as well. 

Mr. Farenthold. All right. Would you please keep me posted if 
you run into any hiccups? 

Ms. Feinberg. Be happy to. 

Mr. Farenthold. Thank you. And I will yield back my last 3 sec- 
onds. 

Mr. Denham. Thank you, Mr. Farenthold. 

Ms. Lofgren? 

Ms. Lofgren. Thanks very much. I think this hearing has been 
enormously helpful, not only hearing from the witnesses but hear- 
ing from my colleagues about some of the things of concern to 
them. 

You know, there is a lot of construction going on in Santa Clara 
County for transportation right now per your comments, Mr. Chair- 
man, on BART and ACE. We are building BART right now. We had 
the Secretary of Transportation out last week. The station is al- 
most done in San Jose, and now we are going to the ballot in No- 
vember with a proposal for county voters to tax themselves, renew 
their sales tax to do the extension down to the Dearborn station. 
Obviously, the voters have to decide, but it is polling at a very high 
rate. People are used to paying for what they get. The ACE train 
is about to be expanded, and then with high-speed rail coming in, 
we are going to have a whole system that will really help people 
get to work. The transportation system right now is at gridlock, 
and it is really a drag on economic development, in addition to 
being an annoyance. 

Mr. Hunter, it was so good hearing from you that the men and 
women who are in the building trades build this country, build this 
State, and they are building these systems. We want to make sure 
they keep working on not just these transit projects but other in- 
frastructure projects. I have heard the comment about off-street 
storage versus rail. We need both. There is growing consensus that 
it is not a partisan issue, that there is going to be a need for off- 
street storage. There is not a fight about that. There are issues we 
need to work through on where it is, but I noticed the San Luis 
Reservoir is almost empty. So it is not as if there is an immediate 
need. We have a terrible drought right now. 

I want to ask you, Mr. Richard, you said you are going to fill in 
later with the jobs that are underway, but I would love to get, if 
you could off the top of your head, an outline of who is in the work, 
what has happened so far in the construction, who will be put to 
work, and where. 

Mr. Richard. Well, there are hundreds and hundreds of people 
who are directly involved in the construction right now. We have 
seven construction sites in the Central Valley of the viaducts, 
which are the long lead-time items. But beyond that, for example, 
the columns, the concrete that was made for the Tuolumne Street 
overcrossing was made in Lathrop, California. So people in that 
community, which is in the Central Valley, are working in a factory 
to make those pre-cast things that drive down to Fresno. 



34 


The other thing that I think is really important here is I am 
proud that my colleagues on the California High-Speed Rail Au- 
thority Board have set up a 30-percent set-aside for small business. 
Right now, we have 276 small businesses working on the project. 
We have a 10-percent set-aside for disadvantaged businesses. We 
have 94 of those on the project. We have a 3-percent set-aside for 
disabled veteran businesses. We have 46 of those disabled veteran- 
owned businesses working on the project. 

Ms. Lofgren. Not 46 vets but 46 businesses? 

Mr. Richard. Businesses. And I can just tell you one business- 
man who is a disabled American veteran, fought for this country, 
runs a business that does environmental remediation. He has ex- 
panded his workforce, including hiring people from the CalWORKs 
program who were homeless, unemployed, who are now working. 
One of them bought his first home ever. There are some really 
wonderful stories about the economic impacts here. 

Ms. Lofgren. Let me ask you this. The chairman sketched a sce- 
nario that no one would find suitable, which is we build this to 
Madera and then that is the end of it. What is your answer to that 
scenario? Is that something we need to fear in your judgment? 

Mr. Richard. Well, when I was listening to the chairman say 
that I thought to myself, I don’t want my name, I don’t want the 
Governor’s name associated with a piece of track in the Central 
Valley that doesn’t connect to the rest of the State. So none of us 
want to see that. 

Mr. Denham. Nor do I, for the record. 

Mr. Richard. Mr. Chairman, that was very clear. But I will just 
say this, to sort of take the extreme position on it. Right now what 
we are building in the Central Valley, if you just looked at that — 
and I don’t — but if you just looked at that, we are taking out 55 
at-grade crossings in the Central Valley right now with this $6 bil- 
lion construction program. We are creating a passenger-only track 
system that will relieve pressure on our freight system because the 
Central Valley has the fifth most traveled Amtrak corridor in the 
United States. I have talked to major agribusiness people down 
there who can’t get freight capacity. So there is a lot we are doing 
right now that will have immediate benefits in the Central Valley, 
but I believe we will be connecting it. 

Ms. Lofgren. I will close with this, Mr. Chairman. I represent 
the Silicon Valley. I think it is essential that we connect the Cen- 
tral Valley and the Silicon Valley. But my husband grew up in Ba- 
kersfield. When I hear people say, well, instead of going from no- 
where to nowhere, I always think the people who live in the Cen- 
tral Valley think they are somewhere, and they are a part of our 
State’s population. 

So I yield back and I thank you again for inviting me here today. 

Mr. Denham. Thank you, Ms. Lofgren. 

Mr. LaMalfa? 

Mr. LaMalfa. Thank you, Mr. Chairman. 

For $100 billion, we can do a lot of things. That is truly what 
this will cost at the end. You can build 20 dams, as was mentioned 
earlier, or possibly 3,000 miles of infrastructure. I think that was 
the figure reported. Think of all those jobs. Mr. Hunter’s col- 
leagues, if they had all that activity instead of what we are talking 



35 


about here, because we haven’t established yet what the true cost 
of this rail is going to be, as I thought 6 years ago legislatively. 

Mr. Richard, I would still like to know after the fact, after the 
voters narrowly approved the measure, there seemed to be a new 
idea to go ahead and drill through the Tehachapis instead of some 
alternative route. Do we have any idea what this is going to cost, 
what tunneling through the Tehachapis will be? 

Mr. Richard. We do. Congressman. If I could just make two 
quick points. 

Mr. LaMalfa. I am short on time, so 

Mr. Richard. Yes. On the southern leg from the Central Valley 
to Los Angeles, that is an estimated $30 billion leg. 

Mr. LaMalfa. OK. So is this reflected in the initial 2008 plan 
the voters saw? 

Mr. Richard. No, but 

Mr. LaMalfa. So we had $33 billion, plus $30 billion. So we are 
at $66 billion right there. 

Mr. Richard. Sir, it is an apples to oranges comparison because 
the numbers we used are fully inflated over the life of the project 
numbers. That is different than a single point number. 

But my main point to you is I wasn’t here in 2008. I came in in 
2011. The Governor told us to tell the truth to the people about 
what it would cost. We stood up and we told them that. I wasn’t 
here for the earlier time. Today 

Mr. LaMalfa. It doesn’t matter who was here because you said 
something about a commitment to the program working as it is, a 
commitment to a true high-speed rail train. 

Mr. Richard. That is right. 

Mr. LaMalfa. And that would be one that runs from S.F. to 
L.A., and makes it in 2 hours and 40 minutes. 

Mr. Richard. That is right, and right now that looks like it will 
cost $64 billion over its life, fully inflated. That number, if it 
were 

Mr. LaMalfa. Including the drilling through the Tehachapis. 

Mr. Richard. Yes, sir. 

Mr. LaMalfa. You can do it for that original $30 billion that 
wasn’t included in the original plan. 

Mr. Richard. I don’t think I understand or accept the second 
part of your question, but I am saying that for the $64 billion fully 
inflated cost, we will build you a system from San Francisco to Los 
Angeles, including going through the Tehachapis. 

Mr. LaMalfa. I don’t see how those numbers can possibly come 
in on that. But that said, right now, again, we can identify about 
$13.5 billion, plus what you are pulling in from the Cap and Trade, 
which by the time SB-32 finishes putting a noose around whatever 
petroleum products are drilled in California industries — the indus- 
tries are leaving in droves — ^you are not going to tap a whole lot, 
even in a good year for Cap and Trade. Half-a-billion dollars, I hate 
to project how many years that half-a-billion dollars it would take 
to raise $55 billion or $58 billion or $100 billion. 

So, sir, where is the money going to come from? There is no pri- 
vate-sector money. The Federal Government isn’t in a mood to do 
this since we already have a $19.5 trillion national debt, and we 



36 


have other priorities. Where will this additional $55 billion come 
from? Because I don’t see it forthcoming from anywhere. 

Mr. Richard. Well, it is a longer conversation than we have 
today, but the private-sector money is going to be a very robust 
part of this, and it will equal about a third of the contribution 

Mr. LaMalfa. There are taxes, but they are not California in the 
private sector. 

Mr. Richard. I am trying to do this as quickly as I can. The pri- 
vate sector has told us — we are not able to offer any kind of a sub- 
sidy. That means the private sector needs to see the first leg oper- 
ating before they will come in. Our estimates are that there will 
be about $20 billion of net present value of private-sector contribu- 
tion — 

Mr. LaMalfa. Could we meet them, please, at another meeting? 

Mr. Richard. Yes, sir. 

Mr. LaMalfa. All right. As Mr. Capuano was talking about, the 
system is successful in the Northeast Corridor. I have ridden that. 
I like it, you know? But it makes sense in a dense urban area, that 
Boston to Washington area, with lots of stops. You have to have 
lots of stops where people get on and off. It isn’t truly high-speed 
anymore when you are stopping a lot. California can’t do that be- 
cause if you are stopping in Wasco and places like that, you are 
not high-speed rail anymore. So this is a project that isn’t nearly 
the same as the Acela in the Northeast Corridor. It can’t make 
money when you are stopping. It can’t fulfill the mandate that the 
voters voted for, for true high-speed rail. 

I was told one time that if one train ran north to south at full 
speed without stopping, that would fulfill a high-speed rail system. 
The rest is going to be commuter lines stopping in Hanford and 
Shafter, even in the Bakersfield area, although without Buck 
Owens and Merle Haggard around anymore, so there is less reason 
to stop in Bakersfield. 

That said, I don’t see how this can be successful, sir. How do you 
see this as being successful? And lastly, what will the price of the 
ticket be these days since it cannot be subsidized? 

Mr. Richard. I will say this very quickly. Congressman. In our 
business plan, what we use for our revenue models, if we had the 
system in place today we believe it would have to compete with the 
airlines. So we priced the ticket at 85 percent of a discounted air- 
fare between L.A. and San Francisco, roughly about $83. 

On your other question, it is a longer conversation, but I will say 
this, and I say this to you as a person who I know is a conservative 
Republican: We are building this system to be operated by the pri- 
vate sector. The Government would put in the first money, but it 
is the private sector that would bring their genius, their innova- 
tion, their efficiency to operate it. They are telling us they want the 
chance to do that. To do that, they know they have to compete with 
the airlines and they have to provide a service that would make 
money. 

The Acela is not true high-speed rail, but it throws off operating 
cash. Every high-speed rail system in the world, once it is built, 
throws off positive operating cash. That is why the private sector 
wants to come in and operate this system, and they will be able 
to operate it successfully. We really believe that, and all our models 



37 


and all our numbers — and we have the former vice chair of Bank 
of America on our board who has looked at all this and says this 
will operate profitably when we get it done. 

It is a longer conversation. I welcome the opportunity, Mr. 
LaMalfa, to have it with you. 

Mr. LaMalfa. You made my point right to Amtrak, which I am 
heartily supportive of, and it still requires the input of Federal dol- 
lars to keep it 

Mr. Richard. All but the Acela. 

Mr. LaMalfa [continuing]. The Northeast 

Mr. Richard. That is right. 

Mr. LaMalfa. But the rest of it, it doesn’t. 

Mr. Denham. I think this will require a longer debate. 

Mr. LaMalfa. Thank you, Mr. Chairman. 

Mr. Denham. Mr. Capuano? 

Mr. Capuano. I would like to yield a few minutes to my col- 
league, Ms. Lofgren. 

Ms. Loegren. I just wanted to mention that in terms of the sub- 
sidy, we don’t know precisely but the tech companies, they have the 
Google bus, the Yahoo bus, the Genentech. I saw them coming off 
here on 280. In talking with the technology sector in Silicon Valley, 
they fully expect that they will be part of financing their employees 
on the system, and it would actually cost them less than what they 
are paying to get their employees to work now. 

I thank the gentleman for yielding. 

Mr. Capuano. I guess I would just like to start out by asking can 
anybody here imagine what would have happened to this country, 
the last time we had a major deficit which actually was greater 
than the deficit we have today, no matter how you measure it, if 
a conservative Republican President had said that because of our 
deficit, we are not building the Interstate Highway System? 
Dwight Eisenhower said we need to invest in our future. We had 
just spent every penny we had in war, on World War II, but we 
knew we had to invest. I can’t imagine what this country would be 
like. 

I am not going to say whether this project is the best way to in- 
vest in our future, or building dams, or something else. That is an 
issue for the people of California. But to fail to invest in our future, 
regardless of the economic situation, is shortsighted and stupid, no 
matter how you look at it. If this is the way you want to invest 
in it, good for you. 

I do want to ask a question about the blended system. That is 
a new term to me. I want to make sure I understand it. That, to 
me, sounds like Amtrak. Am I hearing that correctly? 

Mr. Richard. You are. 

Mr. Capuano. OK. That is not a new system. The question I 
have is do you have the ability to separate this track in the future? 
Because, Mr. Hartnett, I know what you are saying, and I accept 
that you can time these trains right. We do it when we have to do 
it. But one of the biggest problems we have in the Northeast Cor- 
ridor is shared track. It doesn’t mean we don’t do it. We do it. But 
we are doing everything we can now, and spending a lot of the 
money, to separate that track. 



38 


So I am just curious, as you build this, is there the ability at a 
later time to separate the track if and when the system proves via- 
ble? 

Mr. Hartnett. I think the way the system is designed is to 
share our right-of-way and it is to be built substantially within the 
right-of-way. In order to increase the number of trains, there are 
passing track opportunities. While passing tracks can be built, it 
enables us to share the remainder of the track more efficiently be- 
cause of the passing track. So I think that is an integral element 
of the future. 

Mr. Capuano. I get that. I am looking 50 years down the road 
or something. And the reason I am asking is because I am person- 
ally involved with two projects in my own area where we are trying 
everything we can to separate track. Some of it is subway and rail, 
some of it is rail and rail, some of it is Amtrak. It would help us 
greatly — again, I am not saying don’t do the project because you 
can’t do it, but I am hoping that you are thinking long term. 

I guess the other question I have, and again it goes back to a 
personal opinion, as you build up these stations, there has to be 
one. You have to start somewhere. You are not going to build them 
all the same day. You are not going to open them up the same day. 
Is there priority being given to the areas taking local or regional 
leadership in allowing for smart growth? 

I say that because if you are going to build a stop in the middle 
of nowhere, or you are going to build a stop in the middle of a com- 
munity that allows for more residential development and more 
parking opportunities so you can actually get on and off the train, 
obviously I would argue to build in the latter. The communities 
that want to fight it, I guarantee you they will be back 20 years 
later saying we didn’t mean it, but that is a different issue. We can 
jump over them and move to the guys that want to do it. 

I am just curious. Are you doing that, or are you just kind of 
going full steam ahead? 

Mr. Richard. Yes, sir. Very quickly. And by the way, I grew up 
in the DC area, so I am very familiar with Georgetown and the 
Metro and the communities that said no and the communities that 
didn’t. 

This is a particular passion of mine. This is how we really make 
the system work for everybody and meet our environmental objec- 
tives, is we have to look at transit and land use. I had the transit 
land-use committee of my board. We are looking at developing sus- 
tainability and connectivity and density standards around the sta- 
tions. We absolutely need to do that and build these stations the 
right way. 

Mr. Capuano. Thank you. I yield back. 

Mr. Denham. I know better than to cut off the ranking member. 
We work very, very closely together. We have a trip here ahead of 
us. 

Let me first start by thanking all of the Members for not only 
expressing their views but for keeping us on time today. And I 
want to thank each of our witnesses today for taking time out of 
your schedules to be here with us today. A lot of information, but 
I would say the most important information that we usually get out 



39 


of each of these hearings is the questions that we have to follow 
up afterwards. 

Ms. Feinberg, I specifically want to thank you and all of the work 
that you have done to keep our rail systems safe across the coun- 
try. We have made some big accomplishments this year with imple- 
menting PTC, Positive Train Control, as well as the new tank car 
rules, working together to make sure that the crude by rail that 
is moving throughout our communities is much safer. I think one 
of the most important issues is alerting and training our first re- 
sponders, letting them know not only what is coming through our 
communities but making sure they have the training to address 
any catastrophe that we may see. 

So I just want to thank you for your ongoing relationship and 
communication that we continue to have. I look forward to working 
with you in September in Washington, DC. 

And Mr. Richard as well, we have communicated well. Early on 
we had a number of hearings. I don’t expect to have another over- 
sight hearing for some time, but you certainly had previous leader- 
ship that ran things a different way. We have had a great relation- 
ship and having a discussion about some of these, but we have not 
always agreed on our approach. But you have been very accessible, 
and I hope to address a number of the transparency issues. So we 
would follow up with some questions that we still have outstanding 
from this committee. 

As well, I want to thank each of our other panelists. You each 
have different concerns, as we have different concerns, and your 
testimony today has been very helpful. 

I just have one last thing that I want to touch on. We have an 
election ahead of us. There will be a new administration, and we 
still have $2.9 billion for the initial operating segment, which you 
say you need to have completed before we can have private invest- 
ment. 

So first of all, on the initial operating segment, regardless of who 
the next President is, it sounds like both candidates are making 
positive statements about infrastructure investments. What do you 
need? What do you anticipate going back to the Federal Govern- 
ment for on the initial operating segment? 

Mr. Richard. Just to be clear, Mr. Chairman, our business plan 
says that even without that $2.9 billion, we can open an initial op- 
erating segment. What we are saying to the Federal Government 
is we are going to put all this money in at the State level, but if 
you help us with this piece, it will really enhance it, enhance the 
value, and I can follow up with you on that. 

But I wanted to be clear, we don’t need the Federal dollars to 
open the initial operating segment beyond what we have already 
received from the Congress and the administration, but we think 
we are ready to have a good conversation with you about the costs 
and benefits there. 

Mr. Denham. And the initial operating segment you are defining 
as 

Mr. Richard. Well, I am defining it south of Fresno or north of 
Bakersfield into San Jose, with more limited service to San Fran- 
cisco. We can enhance service to San Francisco and reach down to 
Bakersfield with this additional support. 



40 


Mr. Denham. And the phase 1 of this project, do you anticipate 
Federal tax dollars, and do you have an idea of what that Federal 
request would he as well? 

Mr. Richard. I would just say this, Mr. Chairman. Right now, 
if we got no more Federal money and we were able to build this, 
the Federal contribution to California’s high-speed rail system 
would be 5 percent. I would submit to you that that is a far lower 
percentage of Federal participation of any major transportation 
project in this Nation. Without giving you a specific number, I 
would like to work with the Congress. Once we establish that we 
are on track and we are doing this in the right way, to have a more 
intelligent conversation, not just about grant money but about 
things that you can also do to help us accelerate private-sector in- 
vestment. 

Mr. Denham. Thank you. 

Thank you. Again, I want to thank all of our Members here 
today, as well as our witnesses. 

I am going to ask unanimous consent that the record of today’s 
hearing remain open until such time as our witnesses have sup- 
plied answers to any questions that may be submitted to them in 
writing; and unanimous consent that the record remain open for 15 
days for any additional comments and information submitted by 
Members or witnesses to be included in the record of today’s hear- 
ing. 

Without objection, so ordered. 

I would also like to thank again Ms. Pelosi for inviting us or hav- 
ing us in her beautiful city and her great district and allowing us 
to have this hearing here today. 

If no other Members have anything to add, the subcommittee 
stands adjourned. 

[Whereupon, at 11:04 a.m., the subcommittee was adjourned.] 



41 


WRITTEN STATEMENT OF SARAH E. FEINBERG 
ADMINISTRATOR 

FEDERAL RAILROAD ADMINISTRATION 
U.S. DEPARTMENT OF TRANSPORTATION 

Before the 

Committee on Transportation and Infrastructure, 
Subcommittee on Railroads, Pipelines, and Hazardous Materials 
United States House of Representatives 

Field Hearing on the Continued Oversight of California High Speed Rail 

August 29, 2016 


Chairman Denham, Ranking Member Capuano, and Members of the Subcommittee; thank you 
for inviting me to today’s field hearing on California High-Speed Rail. 

Over recent years, much attention has been paid to the urgent need for the United States to 
modernize its transportation system in order to move our country forward in a mobile, 
knowledge-based economy. Congress rightfully recognized that to achieve this goal, our 
transportation system must include more reliable, frequent, and faster intercity passenger rail 
service when it passed two landmark pieces of legislation: the Passenger Rail Investment and 
Improvement Act of 2008 (PRIIA) and the American Recovery and Reinvestment Act of 2009 
(ARRA or Recovery Act). 

PRIIA established the foundation for FRA’s High-Speed and Intercity Passenger Rail (HSIPR) 
Program. The Recovery Act provided $8 billion in seed money to begin building this stronger 
passenger rail system while also jump-starting the country’s economic recovery from the Great 
Recession. A year later, Congress provided another $2.5 billion for the HSIPR Program in its 
Fiscal Year (FY) 2010 appropriations bill.' 

High-Performance Rail 

FRA built the High-Speed and Intercity Passenger Rail Program based on a national vision to be 
executed by states, similar to how the federal government built the Interstate Highway System 
more than a half-century ago. The HSIPR Program gave states the ability to seek funding for 
projects that best reflect the needs and characteristics of their individual markets. 

Thirty-nine states, the District of Columbia, and Amtrak submitted nearly 500 applications to 
FRA that requested more than $75 billion worth of projects - far exceeding the $10.1 billion 
available. FRA awarded the $ 1 0. 1 billion to nearly 1 50 projects, including $3.5 billion to the 


In April 2011, Congress rescinded S400 million from this total. 



42 


California High-Speed Rail Authority (CHSRA) for its effort to build its California High-Speed 
Rail System between San Francisco and Los Angeles.^ 

Driving Factors for High-Speed Rail in California 

With California’s growing population, the state understandably acted to build a modem, high- 
speed rail system that it can grow with and that will serve the state well into the future. The 
following few points underscore why this high-speed rail project is important to both California 
and the country; 

• California is the world’s sixth largest economy, with 12 percent of the nation’s 
population and 13 percent of the Gross Domestic Product (GDP), California’s success is 
critical to the nation’s economic vitality; '* 

• California’s roads and airports are among the most congested in the country. Los 
Angeles-to-San Francisco is the busiest and most delay-prone short-haul air market in the 
U.S., with approximately one of every five flights late by an hour; and 

• Directly related to the congestion problem, California has very serious air quality issues. 
According to the American Lung Association, six of the ten cities with the worst air 
quality are in California, four in the Central 'Valley (Bakersfield, Visalia-Portervdlle- 
llanford, Fresno-Madera, and Modesto-Mcrced),^ 

The challenge of moving more people and goods in a safe, efficient and environmentally 
sustainable way will only continue to grow. During the last five years alone, California gained 
nearly 1 .7 million people — nearly the population of my home state of West ’Virginia.*’ And by 
2050, California is expected to have 50 million residents.’ This growth is equivalent to adding 
the entire population of Ohio to California’s current population. 

Without high-speed rail, a study found that “California would have to add between 2,300 and 
3,000 miles of highway lanes, approximately four to five new airport runways, and between 90 
to 1 15 airport gates.”* 

High-speed rail will add a significant amount of transportation capacity to the state’s current, 
congested system and help alleviate the pressure on California’s runways and highways. This, in 


^ An additional S400 million was aw'arded to the Transbay Joint Powers Authority for the Transbay Transit Center, 
which will serve as the northern terminus of the California HSR system. 

http;//www,b!oomberg.cont/politics/articles/2016-06-14/california-overtakes-france-to-become-sixth-largcst- 

economy. 

’ http://www.lao.ca.gov/reports/201 3/ealfacts/calfacts_01 0213. aspx. 

American Lung Association, “State of the Air 20 1 6” report measures ozone and particle pollution across the United 
States 2012-2014. http://www.lung. org/our-initiatives/healthy-air/sota-'air-quality-facts 
California Department of Finance, “E-4 Population Estimates for Cities, Counties, and the State, 2011-2016 with 
2010 Census Benchmark,'’ May 2016. 

^ http;//www.ppic.org/main/publicalion_show.asp?i=259. 

^ UCLA School of Law and UC Berkley School of Law, “A High Speed Foundation,” August 2013. 
ht!ps:/./w'ww.law. bcrkeicv.edu/filcs/bcci/Embargocd vcrsion.pdf . 


2 



43 


turn, will yield public benefits through economic development that spurs regional productivity 
and competitiveness, improved safety, reduced emissions of greenhouse gas and other pollutants, 
and a reduction of wear-and-tear on other infrastructure in the state. 

FRAfs Investment in California 

CHSRA is pursuing a phased approach to implement the entire California HSR System. This 
approach is consistent with how other high-speed rail and major infrastructure systems have been 
implemented, both in the U.S. and across the globe. 

CHSRA is leveraging the majority of the $3,5 billion in federal funding to construct the first 119 
miles of infrastnicture in California’s Central Valley between Madera and Bakersfield. 

Recovery Act funding is also being invested in preliminary engineering and required 
environmental reviews for remaining sections of the California HSR System between San 
Francisco and Los Angeles. CHSRA committed approximately $2.9 billion in state matching 
funds to complete the first 119 miles of the project as well as preliminary engineering and 
environmental work for San Francisco to Los Angeles portion of the system. This commitment 
is secured by enforceable cooperative agreements between FRA and CHSRA. To date, CHSRA 
has spent approximately S 1 .4 billion of the $2.5 billion Recovery Act grant. 

Through the 2016 Business Plan, CHSRA announced its plan for initial operation between 
Silicon Valley (San Jose) and the Central Valley (near Bakersfield) by 2025. CHSRA projects 
operations from San Francisco to Los Angeles and Anaheim will begin in 2029. 

FRA continues to work closely with CHSRA throughout its planning, environmental analysis, 
and project development processes to identify opportunities for operational and engineering 
efficiencies. These efforts serve to maximize the value of these investments, meet compliance 
requirements, and address impacts to communities. 

Oversight 

Like all major and ambitious transportation projects, whether public or private and no matter the 
mode, there have been, and remain, important challenges that demand continued attention and 
conscientious oversight. FRA takes its obligations to protect the taxpayer’s investment seriously 
and closely monitors all of its grantees, including CHSRA. 

As CHSRA accelerates its construction activities and expenditures, FRA has a team of staff 
dedicated to oversight, monitoring, technical assistance, and general programmatic support to 
protect the federal investment and ensure successful delivery of the project. FRA’s monitoring 
and oversight efforts include a robust, risk-based program to (1) ensure compliance with federal 
rules and regulations; (2) identify fraud, waste, and abuse; and (3) identify the need for technical 
assistance. As is true for any FRA funded project, a regional team of interdisciplinary experts 
manages the CHSRA grants on an ongoing basis. 

Consistent with grants management and oversight best practices, FRA works closely with our 
grantees to ensure that their grant agreements are current. If deemed necessary, FRA will 
consider amendments to a grant or cooperative agreement as an e.ssential exercise of our due 
diligence. Complex projects may require more than one amendment to address changes in 


3 



44 


timing of activities such as procurement and construction. While a grant may be funding an 
unprecedented project, amending a grant is common. In fact, FRA has amended 383 of the 433 
grants obligated from January 2010 to July 2016 at least once. Given the complexities of the 
CHSRA grant agreements, FRA has previously executed amendments to these agreements to 
maintain comprehensive oversight while administering the HSIPR program. 

On May 1 8, 20 1 6, CHSRA and FRA executed the sixth amendment to the CHSRA cooperative 
agreement that governs the approximately $2.5 billion in Recovery Act funding. The purpose of 
this amendment was to ensure that it accurately reflects the project status and planning. This 
amendment improves FRA's ability to oversee and monitor the grant and further ensures that 
CHSRA is accountable to deliver the project. 

In the last grant amendment, CHSRA also requested FRA’s approval of a $60-million working 
capital advance for right-of-way acquisitions of approximately 200 ptircels needed to allow 
construction work to progress. Let me take this opportunity to explain this method of payment: 

A working capital advance is one of the methods of payment allowed under the Federal 
government’s rules involving federal financial assistance’. This authority is available, and can 
be used effectively where timely right-of-w'ay acquisition presents a challenge for large 
infrastructure project across the country. In this example, CHSRA's ability to efficiently acquire 
real property is essential to keeping the project on schedule. 

FRA reviewed CHSRA's request for a working capital advance and determined that it was 
appropriate to use this method of payment. Our approval of CHSRA’s request includes 
conditions and limitations to protect the taxpayers’ interest. For example, CHSRA will submit 
monthly reports documenting its expenditures from the working capital advance to FRA. 
Furthermore, like any grant expenditure, FRA has the right to demand repayment if it finds grant 
funds were used for an ineligible purpose. 

Similar to all grants funded by the Recovery Act, the funds FRA has invested in California are 
subject to the September 30, 2017 spending deadline, regardless of payment method. 

As part of our management of the CHSRA cooperative agreement, FRA is in daily 
communication with CHSRA to receive up-to-date project information. FRA will continue to 
monitor and oversee CHSRA as it implements this important infrastructure project throughout 
the grant’s period of performance. We understand the complexity of delivering a project of this 
magnitude. FRA’s close work with CHSRA and our monitoring program allow us to proactively 
identify potential risks and develop appropriate strategies in collaboration with CHSRA to 
mitigate those risks and successfully deliver this project. 

FRA remains fully committed to its oversight role during the expenditure of grant funds and will 
also oversee the safety of the system when it is online. For California to continue on its 
trajectory as the State that attracts talent and generates ideas that fuel innovation with a global 
impact, it must maintain its commitment to high-speed rail. 


Code of Federal Regulations, title 49 part 18. 


4 



45 


Conclusion 

For centuries, leaders in California and across the United States have built bold projects. Many 
of those projects haven’t been easy or without challenges; but, in the long run, we as a country 
must still do big things, and these projects are worth the persistence and dedication because they 
are necessary to move our country forward. 

Thank you, Mr. Chairman, for the opportunity to testify, and I am happy to answer any questions 
you may have. 


5 



46 


Statement of Dan Richard 

Chairman of the California High-Speed Authority Board of Directors 
Hearing on “Continued Oversight of California High-Speed Rail” 

Before the Subcommittee on Railroads, Pipelines, and Hazardous Materials 
Committee on the Transportation and Infrastructure 
U.S. House of Representatives 

August 29, 2016 

San Francisco Federal Building - 90 7“'’ Street 
San Francisco, California 

Chairman Denham, Ranking Member Capuano, and Members of the Subcommittee, I appreciate 
the opportunity to appear before you today to discuss the California High-Speed Rail program as 
part of the Subcommittee on Railroads, Pipelines, and Hazardous Materials ongoing oversight. 1 
am Dan Richard, Chairman of the Board of Directors of the California High-Speed Rail 
Authority (Authority). In this testimony, 1 would like to highlight major areas of progress the 
Authority has made since this Subcommittee's last oversight hearing in January 2014. I will also 
summarize some key elements of the Authority’s 2016 Business Plan,‘ most notably the 
Authority’s decision to deliver Silicon Valley to Central Valley as an initial operating line while 
making concurrent system-wide strategic investments throughout the state. Looking forward, 1 
would like to provide some thoughts about how Congress and the Administration can advance 
the development of high-speed rail in California and nationally. 

Mr. Chairman and Ranking Member, much has happened since this Subcommittee’s last 
oversight hearing in January 2014. Starting with our official groundbreaking in January 2015, 
there are now more than 1 1 9 miles of construction-related activities underway with almost $3 
billion in contracts, all of which came in with bids lower than our estimates. Major construction 
activity in the Central Valley is providing good paying jobs and creating opportunities for small 
and disadvantaged businesses all over the state. At the same time, our capital cost estimates for 
building the Phase 1 system between San Francisco /Merced and Los Angeles/Anaheim are 
lower than prior estimates, 

In 2014, the California State Legislature and the Governor reaffirmed their commitment to the 
program by providing a new ongoing revenue stream through the state’s Cap and Trade proceeds 
(also refeiTed to as Greenhouse Gas Reduction Funds). This and other developments have 
influenced the strategic direction of the program expressed in the Authority’s 2016 Business Plan 
that was submitted to the State Legislature this May, We now have a clear path forward for 
funding the initial operating line from the Silicon Valley to the Central Valley with federal and 
state public funds already committed to the program; and we plan to commence high-speed rail 
passenger service by 2025. 

As stated in the 2016 Business Plan, our fundamental objective is to initiate high-speed rail 
passenger service as soon as possible so we both demonstrate its benefits and begin generating 
revenues that will then attract private sector participation and help fund extending the system 


■ The California High-Speed Rail Authority 2016 Business Plan: 
imp:/ w'v owiisr.c a.vor' about busine ss p la ns/2Q16 Biismoss Pla u.hlinl 


1 



47 


beyond an initial operating line. And while delivering an initial operating line, we will also 
make strategic concurrent investments throughout the California High-Speed Rail corridor that 
will provide early benefits to local communities and regional transportation systems and be 
linked together over time. 

I. Major Areas of Progress Since 2014 

A. Construction, Jobs and Small Businesses 

Mr. Chaimian, during this Subcommittee’s January 2014 oversight hearing, you questioned 
whether our program had created any construction jobs. There is no longer any question about 
this point, which was of course the central goal of the American Recoveiy and Reinvestment Act 
of 2009 (ARRA; P.L. 111-5). Apart from statistics, I would like to renew my earlier invitation 
to you and the Members of this Subcommittee to tour our project construction sites in the Central 
Valley so that you can see for yourself the transformative progress we are making on the ground. 
America’s first trae high-speed rail system is under construction in California. 

Leading up to and continuing after the January 2015 groundbreaking, we advanced the design, 
secured right of way, attained permits and continued geotechnical investigations that are 
essential to completing structural design, demolished mostly-dilapidated existing stnicmres and 
relocated utilities along the right of way in preparation for the construction of dedicated high- 
speed rail trackways and bridges. Our construction priority is to build the long-lead time and 
more complex viaducts and overcrossings first, since the at-grade alignments will proceed more 
quickly later on. Since the start of conslinction more than a year ago, the project now has seven 
active sites with more to come this fall (for more detailed updates, including videos of out- 
progress, please visit BuildHSR.com ): 

> By June 2015, the first vertical structure started taking shape at the Fresno River Viaduct 
in Madera, Seven small businesses and more than 100 workers have been involved in the 
construction of the viaduct. 

> In January 2016, we began demolishing and then rebuilding the Tuolumne Street Bridge 
in downtown Fresno to allow for clearance over the high-speed rail line and for two-way 
traffic to support the revitalization of downtown Fresno’s city core. 

> In February 2016, we began preparing for construction of the Cedar Viaduct, which 
will mark the southern end of the high-speed rail line through Fresno. The viaduct will 
have four, tall concrete arches and extend over State Route 99, as well as North and 
Cedar Avenues. 

> In Februaiy 20 1 6, drilling and concrete operations began at the Fresno Trench, the almost 
1 .5 mile long and 40-foot deep trench that will carry high-speed rail trains under State 
Route 180 in Fresno. 


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48 


> In partnership with Caltraiis, work has begun to realign portions of State Route 99 north 
of Fresno to accommodate high-speed rail and, at the same time improve traffic 
operations, reducing congestion and improving safety in this busy corridor. 

> Rebar cages have now been installed to form eight columns for the bridge at Cottonwood 
Creek in Madera County. Crews are in the process of pouring concrete for those 
columns. The Cottonwood Creek bridge will be 250 feet long stretching from north of 
Avenue 13 to south of Avenue 15 in Madera County. 

> Engineers are reviewing plans to stait foundation work in the riverbed at the San Joaquin 
River Viaduct in North Fresno, which will feature two concrete arches and a “pergola” 
structure that will allow high-speed tracks to travel above the already established Union 
Pacific tracks. Rebar cages have been tied and are ready to be placed once drilling work 
is complete. 

Cun-eiitly, this construction is being supported by the Authority’s partnership with the Federal 
Railroad Administration (FRA) and its participation High-Speed Intercity Passenger Rail 
(HSIPR) program with funds made available through ARRA.^ The Obama Administration 
proposed and the Congress enacted ARRA to create jobs, aid the economic recovery of the 
Nation's poorest areas, spur technological development, and build new transportation 
infrastructure that provides long-term economic benefits - and the California High-Speed Rail 
program continues to contribute to these goals. 

The Authority has set an aggressive 30 percent goal for small business participation. And Mr. 
Chairman, given your personal advocacy on veterans’ issues and your support for veteran hiring 
programs both nationally and here in California, I would like to highlight the Authority’s specific 
goals for Disadvantaged Business Enterprises (DBE) and Disabled Veteran Business Enterprises 
(DVBE) of 10 percent and three percent respectively. There are cuiTently 276 small business 
contractors engaged in work on the California High-Speed Rail program statewide; of that 
number. 94 are DBEs and 35 are DVBEs, Additionally, the Authority has dispatched over 470 
craft labor workers to its design-build construction package sites, who have worked over 165,000 
craft labor hours. 

Mr. Chairman, Ranking Member, and Members of the Subcommittee, the Authority’s invitation 
to tour its Central Valley construction sites remains open. In addition to seeing for yourselves 
the progress we are making on the ground, I would also like you to meet the construction 
managers, workers, small business owners and veterans who are supporting this transformative 
program - and in some instances - listen to how this program is also transforming their lives and 
providing them with new opportunities. 


’ The Authority received a $2,552 billion Federal Railroad Administration (FRA) High-Speed Intercity 
Passenger Rail (HSIPR) grant funded by ARRA, a $928 million HSIPR grant funded by the Consolidated 
Appropriations Act. 2010 (Fiscal Year 2010 Appropriation Act, P.L. 111-117), and other funds made 
available through federal appropriations and grants. 


3 



49 


B. September 30, 2017 ARRA Deadline 

The Authority and the FRA are also extremely focused on meeting the September 30, 2017 
statutory deadline for expenditure of ARRA funds. We are continually assessing and improving 
our methods of delivering the project and accelerating construction activity. Last year, for 
example, the Authority began a focused effort to strengthen its right of way organization and 
significantly improved right of way delivery, which paved the way for the significant progress 
we have made in construction 1 just described to you. The Authority, in partnership with the 
FRA, will work to sustain and build upon this progress. 

The Authority is currently tracking almost $1.8 billion in ARRA expenditures and accruals 
against its $2.55 billion ARRA HSIPR grant. Based on progress to date and updated projections, 
the Authority will meet the September 30, 2017 statutory deadline for expenditure of ARRA 
lunds and ensure that every single dollar is spent for the purpose it was intended. 

C. Updated Cost Estimates 

Mr. Chairman, during this Subcommittee’s January 2014 oversight hearing you cited a number 
of cost estimates for the program, some now several years old. Our experience, now that we are 
in construction, is that our design-build contract bids have actually come in significantly lower 
than our estimates. On average. Construction Package 1 and Construction Package 2-3 bids 
came in approximately 30 percent below our estimates. As announced in January 2016, bids for 
the Construction Package 4 contract continued this trend and came in about 25 percent below our 
estimate. All told, the bids for these design-build construction packages have come in 
approximately $537 million to $1 .7 billion lower than our high and low range estimates. That 
said, we have been experienced some challenges on our first construction package. Acquiring 
right of way has lagged and third party agreements have taken longer and are now projected to 
cost more than originally predicted. We acted quickly to identify and address these challenges, 
enhanced our land acquisition process and increased our estimates for third party agreements. 
And, importantly, as we go forward, we continue to maintain appropriate levels of project 
contingency. 

The Authority’s 20 1 6 Business Plan presents a comprehensive update of our capital cost 
estimates, lactoring in the lessons derived from our first design-build construction bids, design 
refinements suggested in those proposals and through other reviews, advancing more detailed 
engineering and design work, conducting value engineering, incoiporating contractors’ 
viewpoints and other changes. Through this process our overall Phase 1 cost estimate has been 
significantly reduced. For the same scope of work, these updated estimates reflect an eight 
percent reduction in costs, down to $62. 1 billion in year of expenditure dollars {YOF,$), when 
compared to the $67.6 billion (YOE$) estimate presented in our 2014 Business Plan. 

1 would also like to remind this Subcommittee that, as a result of a bipartisan request in 2012, the 
Government Accountability Office (GAO) conducted a detailed and exhaustive audit of our 
capital cost estimating methodologies. In releasing its final report in March 2013, it found, 
among other things that “. . .the Authority substantially met best practices for developing accurate 
cost estimates." 


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As a result of the lower capital cost estimates, we now propose to reinvest some of these savings 
to enhance service levels in the vital Los Angeles to Anaheim segment. A $2.1 billion 
investment in that conidor will fulfill the commitment we made in our 2012 and 2014 Business 
Plans to provide one-seat ride service all the way to Anaheim. Our investments will also 
significantly enhance the capacity, speed and reliability of this high demand rail service. 
Moreover, it will greatly benefit public safety by grade-separating some of the most dangerous 
at-grade crossings in the state. 

After incoiporating this additional investment for Anaheim, which represents a change in scope 
since our 2014 Business Plan, our cost estimate has still been reduced from $67.6 to $64.2 billion 
(YOES), which is our revised Phase 1 system capital cost estimate presented in the 2016 
Business Plan. 

D. Progress on Environmental Clearance 

Over the last two years, significant progress has been made in advancing environmental 
clearance of the Phase 1 system. In June 2014, we achieved a National Environmental Policy 
Act (NEPA) Record of Decision on the Fresno to Bakersfield section. Completing the rest of the 
environmental clearance for the entire Phase 1 system as soon as possible is a high priority for 
the Authority. Doing so will provide maximum fiexibility to take advantage of opportunities to 
develop any segment of the system as funding and circumstances allow. 

E. State Funding: Cap and Trade and Proposition lA 

Mr. Chairman and Ranking Member, while the federal government is a critical and necessary 
partner in the California High-Speed Rail program both today and in the future, the majority of 
funding currently committed to the program is California state funding. Additionally, since this 
Subcommittee’s January 2014 hearing, the State of California has brought a new source of 
funding to the table for this program. 

In 2014, the state began providing “Cap and Trade” auction proceeds to the Authority for the 
California High-Speed Rail program. Cap and Trade auction proceeds are revenue generated by 
the state from the sale of emission allowances as part of the state’s efforts to reduce greenhouse 
gas (GHG) emissions. Significantly, with the June 2014 enactment of Senate Bill 862, the 
Legislature and Governor approved an annual appropriation of 2.$ percent of the annual Cap and 
Trade proceeds on a continuous basis to fund California High-Speed Rail. 

This long-tenn commitment of Cap and Trade proceeds to the program has influenced the 
program’s strategic direction as expressed in 2016 Business Plan; with this new funding, and the 
public federal and state funds already committed to the project, the Authority is positioned to 
deliver the first operating high-speed rail line in the country by expanding beyond the Centra! 
Valley into Silicon Valley. To date, we have received $1.1 billion in Cap and Trade funds for 
high-speed rail. 


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Additionally, in 2008, California voters approved the “Safe, Reliable High-Speed Passenger 
Train Bond Act for the 2H' Century” (Proposition lA). Proposition lA authorizes the state to 
issue $9.95 billion of general obligation bonds, $9 billion of which will be used to develop high- 
speed rail. Proposition lA also stipulated certain operational requirements and that the system 
would operate free of federal, state or local subsidy. Approximately $2.6 billion of this 
authorized funding has been appropriated by the California State Legislature to match federal 
grant funds in the Central Valley; and $1.1 billion has been appropriated for “Bookend 
Investments” including Caltrain electrification on the San Francisco Peninsula and other early 
improvements in Southern California, Another $950 million is authorized for regional 
connectivity projects, as laid out in Proposition 1 A. These ftmds have been used to fund 
regionally significant projects in Northern and Southern California including $61 million for the 
Central Subway Project in San Francisco, $35 million for Metrolink Positive Train Control, $114 
million for the Regional Connector Transit Corridor Project in Los Angeles and $58 million for 
improvements to the Blue Line light rail system in San Diego. 

The Authority has successfully and favorably resolved all Proposition 1 A litigation challenges 
filed to date. Trial court rulings in 2013 against the Authority were completely reversed on 
appeal; the reversal is now' final. A remaining claim not heard as part of the 2013 rulings was 
heard and decided in 2016 at the trial court level in favor of the Authority and was not appealed 
by the appeal deadline so is also now final. The Authority anticipates taking the final procedural 
steps to access appropriated Proposition 1 A bond funds this year so that it can utilize this funding 
for construction next year. 

H. Some Key Elements of the 2016 Business Plan 

A. Silicon Valley to Central Valley Initial Operating Line 

Mr. Chairman and Ranking Member, based on the above developments, as well as updated 
ridership, revenue and other forecasts, we have evaluated how to most efficiently achieve the 
objective of getting a high-speed passenger rail line into operations as quickly as possible with 
existing federal and state funding committed to the program. 

Our analysis shows that an operating line that connects the Silicon Valley (from Diridon Station 
in San Jose) to Central Valley (an interim facility north of Bakersfield)^ meets Proposition 1 A 
requirements, including non-subsidized operations. This “Silicon Valley to Central Valley” 
initial operating line can be built with available funding from Proposition 1 A bonds, federal 
funds and the continued anticipated Cap and Trade proceeds. 

The 2016 Business Plan describes how we plan to build the Silicon Valley to Central Valley line 
by 2024 and begin offering passenger service on it by 2025. We also detennined that this is the 


’ The Authority's goal is to avoid the need for an interim station. If, however, an interim station 
is needed due to funding constraints, consideration will be given to alternative locations, such as 
adjacent to the existing Aratrak station in the City of Wasco, with the goals of reducing the level 
of interim investment, minimizing impacts, and maximizing connectivity with the permanent 
station in Bakersfield. 


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best way to begin sequencing of the larger Phase 1 system. By building a line connecting 
northern California to the Central Valley - commencing service and starting to generate revenue - 
we will be in a position to attract private investment and unlock additional capital to help move 
the rest of the system forward. 

Mr. Chairman, during this Subcommittee’s January 2014 oversight hearing, you called on the 
Authority to develop a plan that accepts economic and budgetary realities. I would highlight for 
your attention the March 25, 2016 letter from the California High-Speed Rail Peer Review 
Group that states, “['fhe draft 2016 Business Plan] is also the first Plan in which the Authority is 
shaping its approach in accord with the funding it considers available rather than relying on 
unspecified sources. This shift from an “unconstrained” approach to a “constrained” approach 
lays out the Authority’s assessment of what, given certain assumptions, they can deliver using 
existing funding sources.” 1 believe that, in many ways, the Authority’s 2016 Business Plan 
addresses the issue that you have raised. 

At the same time, the implications of the Silicon Valley to Central Valley connection are 
tremendous. Today it takes about three hours to drive from Fresno to the Bay Area; flights are 
available but often at exorbitant prices. With this new connection, a trip from Fresno to San Jose 
will take about an hour on high-speed rail, which is a game changer both for the people and the 
economy of the Central Valley and for Silicon Valley as well. New job markets will be opened 
up for people living in the Central Valley, and creating a high-speed rail connection to the 
Central Valley would help address the affordable housing crisis in the Bay Area. New' linkages 
will be created between higher education institutions in the Central Valley and high-tech and 
other cutting edge industries in the Silicon Valley. And some high-tech companies might choose 
to locate certain corporate functions in the Central Valley where commercial real estate is less 
expensive, generating new job opportunities in this region. 

That said, the Authority’s objective is that the initial line would extend to Bakersfield and San 
Francisco, tying into the electrified Caltrain corridor. This extended line would significantly 
enhance ridership and revenues and therefore attract higher value private sector concession bids 
based on future discounted cash flows. It will require approximately $2,9 billion of additional 
funding to extend the line to Bakersfield and for initial improvements in the San Jose to San 
Francisco conddor to allow reasonable operation of high-speed rail trains in the Caltrain corridor 
between San Jose and the 4th and King Station in San Francisco and ultimately Transbay Transit 
Center. That would be a good investment, however, since it would generate significant 
additional ridership and revenue that could be monetized as an additional $4.4 billion private 
investment in the program. 

It is also the Authority’s goal to complete a connection to Merced. Given the opportunity to 
leverage more ridership, revenue and private sector participation, our priority will be to secure 
additional funds, including federal, to complete fhe full San Francisco to Bakersfield line. The 
state is working with the City and County of San Francisco and others to develop options for 
funding the extension from San Jose to San Francisco. On a cost-benefit basis, this extension 
would provide significant benefits for the system as a whole, enhance regional mobility and 
connectivity and expand private participation. If those additional funds are not forthcoming, we 
can and will still construct the Silicon Valley to Central Valley line described above. 


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B. Concurrent System-wide Strategic Investment 

Mr. Chairman and Ranking Member, it is important understand that while the Authority is 
currently delivering a major construction project in the Central Valley, we have also formed 
strategic partnerships throughout the State of California. Through these partnerships, we are 
making discrete investments that connect state, regional and local rail systems, and that provide 
immediate mobility, environmental, economic, safety and community benefits. Together, these 
investments are also preparing a solid foundation for high-speed rail. We will continue to enter 
into partnering agreements with other transportation providers to aggregate federal, state and 
local funding sources and advance regional planning and coordination. This approach will yield 
the best and fastest results. 

Here in Northern California, we have already taken several concrete steps to lay the foundation 
for high-speed rail in the region. We are proceeding with environmental review and working 
with regional partners and stakeholders to detennine the best, most efficient ways to integrate the 
high-speed rail system into local communities. 

Additionally, we have entered into a Memorandum of Understanding (MOU) with the Peninsula 
Corridor .loint Powers Board whereby we are providing Proposition lA funds to enhance the 
existing rail corridor between San Francisco and San Jose by fully electrifying the Peninsula Rail 
Corridor. These improvements will allow the high-speed rail system to eventually blend with the 
Caltrain commuter rail system. Caltrain is also installing an advanced signal system, including 
positive train control, which will significantly improve performance and enhance safety on the 
coiTidor. 

Further, we will be entering into an MOU with the City of San Mateo to provide funding for 
three connected grade separations, including a grade separation that is number seven on the 
California Public Utilities Commission (CPUC) list of top priorities. This project will increase 
the efficiency of future blended operations in the Caltrain corridor, and also have significant 
near-term safety benefits. 

Connecting Northern California to the Central Valley will also include significant station 
improvements creating new multimodal connections in northern California - San Francisco, 
Millbrae, San Jose and Gilroy - and new linkages to stations being planned in Merced, Madera, 
Fresno and Kings/Tulare in the Central Valley. These investments and linkages will enhance the 
commercial and retail opportunities at each station, increasing the economic activity in and 
around them. 

In 2014, the City of Gilroy and the Authority entered into a station planning agreement to 
work together to develop a station area plan that will serve Gilroy, south Santa Clara 
County and surrounding areas. Gilroy will become a new gateway to the Bay area 
bringing new opportunities for redevelopment and economic growth. 

Connecting high-speed rail into the Diridon Station in San Jose (the tenth largest city in 
the nation) will provide connections to Bay Area Rapid Transit (BART), Altamont 


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Corridor Express, Caltrain, Santa Clara Valley Transportation Authority light rail and 
buses, Amtrak’s Coast Starlight service and the Capitol Corridor (Amtrak). In April 
2016, we entered into a station area planning agreement with the City ol San Jose and our 
transportation partners to develop new intermodal transportation opportunities in the 
region and encourage transit-oriented development and smart growth policies around it. 

. In addition to transit, rail and ground connections, the Millbrae Multi-Modal Station will 
facilitate a connection to San Francisco International Airport (SFO) allowing Central 
Valley residents to connect quickly and efficiently to SFO for national and international 
travel. 

The Authority’s 2016 Business Plan also firmly restates our commitment, as embodied in a 2012 
Southern California MOU, to work with our state and regional partners and accelerate regionally 
significant concurrent investments in Southern California (while maintaining the goal of starting 
service on the full Phase 1 system by 2029). Through this 2012 Southern California MOU, we 
are working with our partners to leverage resources, work together to secure new funding, 
identify and fund projects ready to move into construction (or advance others through 
environmental clearance) and advance improvements as quickly as possible. As in Northern 
California, these discrete investments will provide significant near-term improvements that will 
benefit passenger, freight and auto traffic, while serving as incremental building blocks for high- 
speed rail service in California. 

For example, the approximately 45-mile rail corridor connecting Burbank-Los Angeles-Anaheim 
is of regional and statewide significance and is critical to supporting the economy of Southern 
California. In addition to moving people, it is a viial freight and goods movement corridor. It is 
part of the nation’s second busiest Amtrak line, is serviced by Mclrolink commuter rail service 
and it will be an essential link in the statewide high-speed rail system. 

Therefore, the Authority has worked closely with Caltrans, the California State Transportation 
Agency (CalSTA) and regional partners to develop an initial package of projects that can be 
advanced quickly, provide immediate benefits and is integral to sequencing in high-speed rail 
service in the Burbank-Los Angeles-Anaheim coiTidor. Focused, strategic early investment 
projects - like grade separations - will increase capacity and improve the speed, safety and 
efficiency of existing passenger and freight services. We will seek to increase the number of 
projects that can be completed by leveraging additional funding sources, including the Transit 
and Intercity Rail Capital grant program, funded by Cap and Trade proceeds, as well as federal 
funding programs. 

> This year, the U.S. Department of Transportation awarded a $15 million Transportation 
Investment Generating Economic Recovery, or “TIGER” Discretionary Grant for 
Rosecrans/Marqiiardt Avenue Grade Separation Project. The CPUC has identified it as 
the most hazardous grade crossing in California. It is also one of the priority projects 
identified in the 2012 Southern California MOU. and he Authority is providing $68.6 
million of Proposition lA funding for this $137.2 million project. When complete, it will 
yield significant traffic, safety and air quality benefits. Passenger rail services throughout 
the region will dramatically improve - allowing service to the Inland Empire to more 


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than double from Los Angeles. Orange County could also see a greater than 50 percent 
increase in rail service as well, 

III. Looking Ahead 

Mr. Chairman and Ranking Member, we have made tremendous progress in the last two years. 
We are achieving real results, creating jobs and opportunities for people, and delivering Nation’s 
first high-speed rail system with the funding that Congress and the Administration have 
provided. The State of California has also committed significant resources to delivering the 
Nation’s first system. High-speed rail is happening, and we 're making it happen together. 
Looking ahead, we must continue this partnership. 

We applaud your leadership in enacting the Fixing America’s Surface Transportation Act (the 
FAST Act, P.L. 1 14-094) last year, which provides a five-year authorization of highway, transit, 
safety and rail programs. We appreciate that the FAST Act authorizes a total of S2.2 billion for 
rail funding from the General Fund over five years, and we urge you to work with your 
Congressional colleagues to ensure that funding for these programs is appropriated. We also 
appreciate the improvements that you have made to federal transportation credit assistance 
programs such as Transportation Infrastructure Finance and Innovation Act 
(TIFIA) and the Railroad Rehabilitation and Improvement Financing (RRIF) program. 

However, traditionally, transportation infrastructure projects of this magnitude can rely on the 
federal government as a funding partner with dedicated, predictable federal grant funding of up 
to 50 percent or higher. Key transportation coixidors, such as the Interstate Highway System, 
were built with 90 percent federal funding. Yet, w'hilc the U.S. has invested $10 billion in high- 
speed rail through the ARRA and Fiscal Year 2010 Appropriation Act funds, in 2015 alone, 
China invested $126 billion — more than 10 times what the U.S. has invested during the last eight 
years — on high-speed rail projects.'' 

Here in California, we believe that America is a country with bold vision that does big things, 
and we believe that robust investment in infrastructure benefits our industry, opens freight 
capacity to enhance the flow of agricultural products and sustains an innovative state economy 
that helps drive America’s economic competitiveness. The California High-Speed Rail program 
represents the first ever effort to build an intercity high-speed passenger rail system in this 
country. California is at the forefront of developing an entirely new American industry where 
investments in and the development of new technologies, manufacturing capabilities, and 
innovative business practices will create high-skilled, good paying jobs and benefit American 
public works for decades. 

We believe that the Califomia High-Speed Rail program may serve as model of a federal, state, 
industry and labor partnership that creates jobs, links economies and communities, creates new 
mobility options, preserves our environment and builds a sustainable future. We must build on 
the momentum and the lessons we are learning here in Califomia - we cannot continue to let 
America fall behind its counteiparts in Europe and Asia in high-speed rail. 


’’ http://www.chinadailv.com.cn/chfna/2016-01/04/content_22926538.htm 


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Therefore, we urge Congress to provide significant, long-term, dedicated and predictable federal 
investment for our Nation’s high-speed rail corridors. Earlier this year, CalSTA Secretary Brian 
P. Kelly wrote members of the U.S. Congress to support the Obama Administration’s proposal to 
provide $6 billion in fiscal year 2017 for high-performance rail service: $2.3 billion for Current 
Passenger Rail Service (e.g., capital expenses on Amtrak state-supported routes) and $3.7 billion 
for Rail Service Improvements (e.g., construction of new high-perfomiance passenger rail 
networks), and I would like to strongly reaffirm California’s support for this proposal. 

IV. Conclusion 

In closing, I would like to thank you again for allowing me to provide you with an update on the 
exciting progress the Authority has made towards implementing the nation’s first high-speed rail 
system. 1 look forward to continuing to work with the Subcommittee to ensure that the nation’s 
first high-speed rail system is built correctly, cost-effectively, and in the best interest of the 
nation’s and California’s taxpayers. 


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BOARD MEMSERS 

dm Richard 

Thowas Richards 

v'lCE ChWj- 

lou Correa 
Daniel Curtin 
Bonnie lowenthai 
loriarne Paskelt 
Mkhaei Rossi 
Lynn Schenk 

Jeff Morales 

CMISir fXECOriVC OfFlCER 


rOMliW!) BfiOWN >f(, 
HOW.nNQK 




CALIFORNIA 

High-Speed Rail Aurtiority 


September 29, 2016 


The Honorable Jeff Denham 
Chainnan 

Subcominitlce on Railroads, Pipelines and Hazardous Materials 
Committee on Transportation and Infrastructure 
B-329 Rayburn HOB 
Washington D.C. 20515 


Dear Chairman Denham: 

I’hank you for the opportunity to testify before the Subcommittee on Railroads, Pipelines 
and Hazardous Materials on August 29 and for allowing an opportunity to augment the 
recoixi of that hearing by responding to written questions. Attached to this letter are 
responses to each of the six questions posed by yourself and Congressman Farenthold. 

Should you have any additional questions or need any further information regarding 
California’s high-speed rail program, please do not hesitate to contact me. 


Sincerely, 



Dan Richard 

Chair, Board of Directors 
California High-Speed Rail Authority 


(enclosure) 


% 

770 L strecft, SuHs^O, Sacramento. CA 95814 •?: (91$) 324-1541 • F: (916) 322-0827 • vyww.hsr.ca.gov 



58 


At the hearing you explained that the electrification project will include intrusion detection 
devices and other mechanisms to minimize unauthorized entry to the corridor. What type of 
censors or fencing will there be to eliminate trespassing? What will be visible to residents? 

The California High-Speed Rail Authority (Authority) gives highest priority to ensuring the 
safety and security of California’s high-speed rail system. Our safety and security management 
team has put a great deal of effort into developing policies and procedures so that California’s 
system is developed according to international safety and security best practices and utilizes 
the most advanced and innovative safety technology available today. 

As we move forward with design and construction of the system, w'e will continue to work 
with federal, state and local officials to implement all necessary safety measures from Positive 
Train Control (PTC) to grade separations, quadgates, intrusion barriers and detection devices. 
As a part of this process, we will identify potential safety and security issues in collaboration 
with our partners across levels of government and incorporate that infonnation into our future 
designs and ultimately construction. We will also be selecting specific technologies that best 
fit the needs of each segment of the system. We believe that this collective process, along with 
information derived from international experience, will result in a system that is as safe and 
secure as possible. We can certainly keep the Committee apprised of developments in this area 
as we move through the analysis and design process. 

The Committee can find current information about our safety and security plans online at 
http:/7hsr.ca.gov/docs/newsroom/fact%20sheets/cahsr safety 2016.pdf (A copy of this 
document is attached). 

How many local Central Valley construction jobs have you created? 

As you well know, Chairman Denham, unemployment in the Central Valley has been more 
than twice the state average for years. However, construction of high-speed rail is already 
helping to address that vexing problem. As a direct result of the state and federal governments’ 
investment in building the Central Valley backbone of the system, people are being put to 
work. Not only are tradesmen and women being directly employed, but construction is having 
a positive impact throughout the region’s economy. 

Indeed, a recent study conducted by the University of the Pacific shows that Fresno-area 
unemployment is now below 10% for only fourth time in the last 25 years, with high-speed 
rail construction being a key factor in this improvement. The report goes on to state that, 
“increasing construction activity on high-speed rail and improved drought conditions in the 
Fresno area will help keep the expansion [of job growth] going in 2016 and 2017.” The 
Committee can find more information about the study here: 

http:,//www.pacific.edu/Documents/school-business/BFC/Forecasts/CA-IVtetro-Forecast- 

Mav2016.pdf 

Specifically, high-speed rail has directly created 500 construction jobs to date - a number that 
is growing all the time as our contractors continue to advance from design to construction and 
mobilize their workforce. To be specific, at present only Construction Package I has fully 


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progressed to the construction stage; Construction Package 2-3 is ramping up and Construction 
Package 4 is still in the design phase of its design build contract. Accordingly, as each of these 
contracts moves into its peak phase, we expect hundreds of additional construction jobs to 
emerge. Thousands more jobs have been created through a combination of all the work being 
done, both directly and indirectly, as a result of all of the contractors and construction workers 
spending their hard earned money in and around Fresno. 

One example of this type of job creation is Outback Materials, a Small Business with 
headquarters in Madera County that was awarded a contract to provide concrete for our first 
construction package in the Central Valley. As a result of this work, Outback has hired 25 new 
employees, purchased over a dozen new pieces of equipment, and even built a new state-of- 
the-art concrete plant in the City of Fresno. 

Outback is just one of many companies with this type of success story, and there will surely 
be more to come. It is also important to note that none of these jobs or business opportunities 
would have been created had attempts to block funding for this critical investment in 
California’s future been successful. 

If the Committee would like more information about the Autliority’s Small Business Program, 
our monthly Small Business Newsletter can be found here: 
http://hsr.ca.gov/docs/Drograms/small business/SB Newsletter 082516.pdf 

Regarding those construction jobs created in the Central Valley, I mentioned at the hearing my 
concern that a person could be living in a hotel room or be a new temporary resident to the area 
using a local ZIP code, claiming to be “residents ” of the Central Valley. What Process are you 
taking to ensure these Central Valley construction jobs are actually residents of the Central 
Valley and not temporary residents? 

No instances of such a circumstance have been reported or alleged to date. The Authority’s 
contractors are responsible for ensuring the accuracy of employee information for the puiposes 
of payroll and taxes. 

zls we discussed, California High-Speed Rail Authority is expecting tickets to on [sic] 
approximately a 20 cents-per-mile basis, and at that price point the HSR would need no subsidy 
whatsoever. This would make CAHSR the cheapest system on a per-mile basis in the world. 
According to the International Union of Railways only 5 of 11 High-speed Rail lines in the 
world make an operating profit and those lines are 30-50 years old and have MUCH higher 
population densities than LA to San Francisco. All other lines require large government 
subsidies to operate. The French TGV, operates at 52 cents-per-mile while in Germany it’s 46 
cents. The closest you get to 20 cents is the heavily subsidized Chinese line between Shanghai 
and Beijing which combine for over 40 million people and charge 22 cents per mile. Please 
provide a detailed actuarial analysis that justifies your project ticket pricing. In addition, what 
is the cost of the tickets you plan on selling for the initial construction segment, and initial 
operating segment, and how did you arrive at those figures? 


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Unlike most conventional rail systems, high-speed rail systems worldwide have demonstrated 
that service revenues are able to cover operating costs without operating subsidies of any kind. 
High-speed rail’s commercial success is based on its ability to provide superior service for 
medium length trips (typically 100 to 600 miles), which are too long for auto travel and too 
short for convenient air travel. The International Union of Railways has consistently said that 
this is the case and the citation here is simply inaccurate. In fact, even the description of the 
Shanghai-Beijing line as being heavily subsidized is incorrect as it has been reported by the 
Wall Street Journal to have earned over $! billion in 2015 
(htto://'blogs.wsi.com/chinarealtime/2016/07/20/chinas-busiest-high-stieed-rail-lme-i'nakes-a- 
fast-buck/ ). 

Other examples of profitable high-speed rail services include: 

• Japan Central which made $4.5 billion in FY2012 alone 

• Renfe, the operator of the Spanish high-speed rail network that made a gross 
operating profit of over $250 million including paying for subsidies on its non-high- 
speed rail services 

• Taiwan which earned $415 million from operations in just its fifth year of service 

• Amtrak’s Acela Express, which makes over $200 million per year while running on 
100-year old infrastructure 

• Eurostar that operates service between London, Paris, and other destinations produced 
a profit of $33 million 

• The Nuovo Trasporto Viaggiatori (NTV) service, known as the “Ferrari trains” spent 
over a €1 billion on trains and other equipment to operate on the Italian rail network, 
with no subsidy whatsoever. They plan to recoup that investment from operating 
high-speed rail services 

• Similarly, after High-Speed I between London and the Chunnel was completed, the 
right to operate that line sold to private sector bidders for close to $3 billion, who will 
recoup their investment from the services (such as Eurostar) that will run on the 
infrastructure. 

• In France, LISEA, a private sector company run by VINCI, is completing 
con.stmction on the roughly $ 1 1 billion Tours-Bordeaux high-speed rail line where 
the private sector invested hundreds of millions of dollars that they will recoup by 
operating the line for 50 years. 

These examples are not unique and represent Just a snapshot of the profitable high-speed rail 
services around the world. In developing the system in California, we are taking into account 
all of this international expertise in developing the system to be able to run profitably, just as 
Proposition lA intended. More information on our ridership, revenue, and cash flow 
projections is included in the 2016 Business Plan.' 


httD://hsr.ca.go v/dQcs/ about/busine.ss Dia ns/201 6 BusinessPlan.pdf 


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Please note as well, that critics of the program often include recovery of capital cost (i.e. the 
cost of building the physical infrastructure) as a metric in determining whether a project is 
operating without a subsidy. This is not a correct measure in terms of legal compliance with 
Proposition lA, nor in terms of a fair comparison with other infrastructure projects. Our 
analysis shows that California’s high-speed rail system, once built, will operate without on- 
going subsidies, based on ticket pricing that is competitive with other modes of transportation. 

How much of the rail line from Los Angeles to San Francisco will be elevated versus at grade? 

The First Construction Segement, consisting of our first three construction packages, from 
Madera County to Kern County will consist of approximately 5 miles of elevated track and 
and approximately 1 10 miles at grade or on berms. 

Since the remainder of the system is still in the preliminary environmental planning phase, 
meaning that no specific aligmnents have been chosen yet, design has not advanced to a point 
where we are able to definitively state how much track will be eleveated versus at grade. We 
can tell you, however, that for cost estimating purposes our 2016 Business Plan assumes 
approximately 325 miles at grade, 75 miles of elevated track and 50 miles of tuimel. 

How much has the use of eminent domain increased the costs you budgeted for right-of-way 
acquisition? 

To date, the use of eminent domain has not increased any costs. Approximately 88% of 
the properties we have acquired so far have been secured through successful direct 
negotiation with property owners. That means that only 12% of the properties we have 
acquired have needed to go through the courts. 

In fact, property acquisition costs are running below our budget estimates, which assumed 
that despite our efforts to negotiate, the use of eminent domain would be necessary in some 
instances as is typical in any large-scale infrastructure program. 


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Testimony of Jim Hartnett, Executive Director of Caltrain 
Field Hearing of Subcommittee on Railroads, Pipelines, and Hazardous Materials 
"Continued Oversight of the California High-Speed Rail" 

August 29, 2016 


Good morning. Thank you for your attention to this issue and for inviting us to share a local perspective. 
I'm Jim Harnett. I'm the Executive Director of the Caltrain commuter rail system and the CEO of the San 
Mateo County Transit District. I'm also a past member of the California High Speed Rail Authority Board 
of Directors and a former Mayor of Redwood City. 

When voters approved Prop lA in 2008 it wasn't just about connecting the state with high-speed rail, it 
was also about improving transportation connectivity on existing systems. The measure included 
significant resources dedicated to upgrading local transportation services to feed the statewide network 
and to improving mobility options for surrounding communities. 

Large-scale, visionary projects like HSR can and should be planned and delivered in a way that prioritizes 
investments in local improvements, while also making incremental, but significant progress toward the 
long-term vision. 

During my time on the HSR Board, I worked with my colleagues to ensure that this approach would be 
embraced. The product of those efforts was SB 1029, which appropriated funding for HSR construction 
in the Central Valley, but also directed over $1 billion for local and regional improvements on the 
"bookends" in southern California and the Bay Area. 

In our case, this State funding is being used to leverage over $1 billion in local, regional and federal 
funds to upgrade the Caltrain corridor and allow us to deliver more service at a time when our 
communities need it most. 

Caltrain is struggling to accommodate unprecedented regional growth. 2016 marked our sixth 
consecutive year of record-setting ridership. As Hwy 101 and 280 have become more and more 
congested, employers have turned to Caltrain as the preferred commute option between San Francisco 
and Silicon Valley. As a result, our peak hour service is well over 100 percent capacity with ridership on 
some trains exceeding 125 percent of available seats. 

The Caltrain corridor, is arguabiy the most economically productive area in the State. The communities 
served by our 51-mile railroad are responsible for 14 percent of the State's GDP, 20 percent of CA tax 
revenue and are the birthplace of over half of California patents. 

However, the region cannot continue to thrive without equipping the 150-year-old rail corridor with a 
modernized transit system capable of accommodating current and future ridership demand. 

Fortunately, with local, state and federal help, Caltrain has been able to advance the Caltrain 
Modernization Program. The centerpiece of this program is the transformation of the corridor from its 



63 


current diesel operations to a system that features high-performance electric trains capable of 
delivering cleaner, faster, more frequent service to Peninsula communities. 

When complete, electrification of Caltrain will be able to serve more riders at more stations. As a result 
619,000 vehicle miles traveled will be eliminated every day and the system's emissions will be reduced 
by 97 percent, eliminating over 176,000 tons of C02 annually. 

Caltrain and HSR have worked with several local, regional and federal partners to secure funding for the 
Caltrain Modernization Program as an early investment in the high-speed rail system. Six Bay Area 
funding partners have agreed to commit significant local funds in order to leverage over $700 million in 
HSR funding and these investments have positioned the project to receive almost $650 million in 
Federal Transit Administration discretionary grant funds. 

Thanks to these commitments, Caltrain was able to authorize contractors to begin design work on the 
project. The next steps will be construction of the project and the procurement of electric trains; work 
that will create over $2.5 billion in economic value, including almost 10,000 new jobs during 
construction. 

Meanwhile, we are also collaborating with the High-Speed Rail Authority as it begins the environmental 
process for additional improvements that will be needed to equip the corridor to accommodate HSR 
service. When HSR is extended north of San Jose, Caltrain and HSR will share the corridor and operate 
on a blended system to San Francisco, The planning and design of these improvements will 
be carefully considered to ensure that impacts on surrounding neighborhoods are minimized and 
benefits are realized. 


Thank you. 



64 



Board of Directors 2016 


Perry Woodward. Chair 
JOS 6 CiSNOS, Vice Chair 
Maiia Cohen 
Jeff Gee 
Re GUiLBAULT 
Raul Peraiez 
JoEl Ramos 
Adrienne TissiER 
Ken Yeager 


Jim Hartnett 
E xEcuTive Director 


September 26, 2016 

The Honorable Jeff Denham, Chairman 

Subcommittee on Railroads, Pipelines, and Hazardous Materials 

2251 Rayburn House Office Building 

Washington, D.C 20515 

Dear Chairman Denham, 

Thank you for Inviting me to testify before the Subcommittee on Railroads, Pipelines, and 
Hazardous Materials on August 29, 2016 in San Francisco. 

Per your letter dated September 7, 2016, 1 am providing written responses to your questions. 

Please provide for the record any plans or iitustrations you have of how pedestrians wilt be 
restricted from going around the quad gates of an at-grade crossing. 

Caltrain has a strong commitment to safety that centers around a comprehensive, ongoing 
program that focuses on the "Three E's" of railroad safety - Education, Engineering and 
Enforcement. Specific to your question about how pedestrian movement Is restricted at a quad 
gate, the below drawing illustrates a channelized pedestrian warning gate. Pedestrians are 
channeled, with guard rails and fencing, towards the pedestrian warning gate arm. At that 
location, they can safely wait while the trains passes. Once the train has passed, the pedestrian 
warning gate arm is raised. The drawing shows only one side of the grade crossing but a similar 
design is included on the opposite side of the grade crossing. 


PENINSULA CORRIDOR JOINT POWERS BOARD 

1250 San Carlos Ave. - P.O. Box 3006 
San Carlos. CA 94070-1 306 650.508.6269 



(n order for California High-Speed Rail to utilize the Caltrain corridor, do you anticipate 
requiring additional track or right of way to be acquired? If so, where would additional right- 
of-way be required , and is the State planning on using enninent domain to secure additional 
right-of-way? 

The California High-Speed Rail Authority (CHSRA) is the lead agency for the Blended System 
project which is currently in the early stages of environmental review. Any right-of-way needs 
for the Blended System project will be identified in the EIR/EIS. CHSRA expects to release the 
draft EIR/EIS in 2017. CHSRA has the authority to use eminent domain to acquire property 
interests but that is typically considered a last resort. For specific information about right-of- 
ways needs associated with the Blended System project, please contact the CHSRA federal 
liaison, Giles Giovinazzi ( Gilcs.Giovinay/.ifadot.ca.uovJ . 



T&l Railroads, Pipelines, and Hazardous Materials Subcommittee Ranking Member 
Reps. Pelosi, Eshoo, lofgren, and Honda 


2 




66 


Law Offices of 

Stuart M. Flashman 
5626 Ocean View Drive 
Oakland, CA 946 1 8- 1533 
(510) 652-5373 (voice & FAX) 
e-mail; stu @stuflash .com 


Testimony of Stuart M. Flashman, J.D., Ph.D. 

Legal Issues Surrounding Funding for California's High-Speed Rail 

Project 

Testimony before the U.S. House of Representatives Committee on 
Transportation and Infrastructure, Subcommittee on Railroads, 
Pipelines, and Hazardous Material 


Field Hearing - Continued Oversight of California High-Speed Rail 
Monday, August 29, 2016 
San Francisco, California 

Chairman Denham, 

Thank you for the opportunity to testify before your subcommittee today. 

Let me start by making it ciear that my testimony today is not intended to criticize high- 
speed rail as a concept. Certainly the examples of high-speed rail implementation in 
other countries have shown that it can provide significant benefits to the public 
transportation system, and that, if implemented prudently, it can be a cost-effective way 
of improving transportation efficiency while reducing greenhouse gas production. 
However, I am afraid that here in California too much has been promised and too little 
is being delivered. 

My testimony will focus on the legal issues affecting funding California’s high-speed rail 
project using State of California funds, and the associated risks to the federal treasury in 
the California High-Speed Rail Authority’s (CHSRA) continued use of Federal Railroad 
Administration (FRA) administered federal grant funds to pay for construction and other 
activities. 

As you know, CHSRA has received approximately $3.5 billion in grant funds through the 
Federal High-Speed Intercity Passenger Rail (HSIPR) program. In addition to that 
federal funding, CHSRA has potential access to $9 billion of state general obligation 
bond funds authorized by the 2008 Proposition 1A (Prop 1A) bond measure, and a 
continuing appropriation of 25% of the proceeds from California's greenhouse gas 
emissions “Cap and Trade’’ auction proceeds. While Prop 1A envisaged that CHSRA 
would secure private capital funding for its high-speed rail project, up to this point no 
private funds have been committed, nor is any private funding visible for the foreseeable 
future. 



67 


In 2012, CHSRA’s Final Business Plan expected to receive $20 billion in federal funds 
between 2015 and 2021 , Of course, no additional federal funds have been 
appropriated after 2010. The 2016 Business Plan now hypothesizes $10 billion in cap 
and trade auction proceeds revenue. I will return to the availability of that revenue at 
the end of my testimony. 

Each of the two California governmental funding sources for CHSRA's project has legal 
issues associated with it, and I will discuss each of them in turn, 

I. THE USE OF PROPOSITION 1A BOND FUNDS TO FINANCE 
CONSTRUCTION OF THE HIGH-SPEED RAIL SYSTEM. 

While Prop, 1 A allocated up to $9 billion for CHSRA’s high-speed rail project’, It placed 
numerous restrictions on the use of those funds. In California High-Speed Rail 
Authority et al. v. Superior Court (“CHSRA v. Sup. CL”) (2014) 228 Cal.App.4th 676, 
California’s Third District Court of Appeal referred to those restrictions as a “financial 
straitjacket,” and stated that the restrictions were intended by the voters who approved 
the measure “to ensure the financial viability of the project.” [id. at p. 706.) 

One set of restrictions, which were addressed in that court case, are contained in 
Streets & Highways Code §2704.08 subdivisions (c) and (d). These provisions place 
stringent procedural hurdles in front of CHSRA before it can spend bond funds on 
construction of its high-speed rail system. The other, which creates substantive 
requirements for the high-speed rail system to be constructed using bond funds, is 
contained in Streets & Highways Code §2704.09. It has at this point been addressed at 
the trial court level in the case Tos et al. v. California High-Speed Rail Authority et at., 
Sacramento County Superior Court Case No. 34-201 1-001 1391 9-CU-WM-GDS, 
judgment entered March 22, 201 6. That judgment is now final and binding on the 
parties involved. A copy of that judgment is attached hereto as Exhibit A for the 
Committee’s reference. 

Prop lA’s procedural requirements on using bond funds for high-speed rail construction 
involve the preparation and approval of two successive funding plans, a first preliminary 
funding plan and a second final funding plan, for the high-speed rail corridor or “usable 
segment’’^ to which the funds would be applied. 

in the first, preliminary, funding plan, which must be completed before CHSRA seeks an 
appropriation of bond funds for construction, CHSRA is required to Identify all sources 
of funding to be invested in the corridor/segment, including their expected time of 
receipt based on expected commitments, authorizations, agreements, allocations, or 
other means. In addition, CHSRA is required to make a series of certifications. These 
include: 

• That construction of the corridor/segment can be completed as proposed in the 
plan; 


’ Prop 1A also allocated $950,000,000 for “connectivity" grants to assist in funding other 
transportation projects that would improve the high-speed rail project’s integration into 
California’s transportation network. 

A usable segment is defined in Prop 1A as a segment of a corridor that contains at 
least two high-speed rail stations. 



68 


• That the corridor/segment [when complete] would be suitable and ready for high- 
speed train operation; 

• That one or more passenger service providers can begin using the tracks or 
stations for passenger train service; 

• That CHSRA’s passenger service on the corridor/segment would not require and 
local, state, or federal operating subsidy; 

• That CHSRA has completed all necessary project-level environmental 
clearances necessary to proceed to construction, 

CHSRA completed its first preliminary funding plan for a segment it designated as the 
“Initial Operating Segment”, which would extend either from San Jose to Bakersfield 
(iOS-North) or from Merced to Burbank (lOS-South), in the Spring of 2012. A lawsuit 
challenged that plan. In CHSRA v. Sup. C/., the court of appeal ruled that approval of a 
preliminary funding plan was not a final action or determination, and therefore the 
objections based on noncompliance with Prop lA’s requirements were not yet ripe for 
adjudication. 

The second, final funding plan requires similar, but more detailed, information about the 
corridor/segment, including the estimated full cost for its construction (included the 
estimated escalation of costs during construction and appropriate reserves) and the 
sources of all funds to be used in the construction and when those funds will be 
received, based on authorizations, allocations, or other commitments or assurances 
received. In addition, it requires one or more reports, prepared by one or more 
independent financial consultants, evaluating the plan and indicating that: 

• The corridor/segment can be completed as proposed in the funding plan; 

• When completed, it would be suitable and ready for high-speed train operation; 

• Upon completion, one or more passenger service providers can begin using the 
tracks or stations for passenger rail service; 

• The passenger rail service to be provided by CHSRA will not require an 
operating subsidy. 

The consultant report(s) must also discuss the risks and risk mitigation strategies 
proposed in the plan. 

The final funding plan, including the consultant report(s), must be provided to the State 
Director of Finance and to the Chairperson of the Joint Legislative Budget Committee. 
Within sixty days, the Director of Finance, after receiving comments from the Joint 
Legislative Budget Committee, is to make a determination, accompanied by findings, of 
whether the funding plan is likely to be successfully completed. If so, CHSRA may then 
enter into commitments to expend the bond funds. According to the court of appeal's 
decision in CHSRA v. Sup. Ct., only at this point would a legal challenge for 
noncompiiance with Prop. lA's requirements ripen. 

The substantive requirements that Prop, 1A places on the system to be built using bond 
funds, contained in §2704.09, specify the following: 

1. The trains must be electrically powered and capable of “sustained maximum 
revenue operating speeds of no less than 200 miles per hour.” 



69 


2. Each of the various corridors to be served has an associated maximum nonstop 
service travel time. Of special note are that the travel time between San 
Francisco (Transbay Transit Center) and San Jose (Diridon Station) must be no 
more than 30 minutes, and that between San Francisco and Los Angeles (Union 
Station) must be no more than 2 hours and 40 minutes. 

3. Achievable headway (time between successive trains) must be no more than five 
minutes. 

4. There must be no more than 24 stations on the entire system. 

5. There can be no station between Gilroy and Merced 

6. Trains must be able to bypass any station at full operating speed. 

7. No change of train can be required to traverse an entire corridor. 

8. The alignments chosen by CHSRA must be financially feasible. 

9. The system must minimize urban sprawl and environmental impacts 

10. To the extent possible, the system is to preserve wildlife corridors and mitigate 
any impacts on animal migration. 

Prop 1A also requires that bond funds provide no more than 50% of the construction 
funding for any corridor/usable segment. (§2704.08{a).) In its decision in the Tos et a!. 
lawsuit, the trial court noted that there appeared, at present, to be substantial questions 
about whether CHSRA’s proposed system could meet requirements numbers 2 and 3. 

It also found, however, that until CHSRA was ready to begin using bond funds for 
construction, these issues were not yet ripe for determination by the courts. 

The 2012 legislative appropriations for the high-speed rail system, contained in SB 
1029, included $3.2 billion of FRA federal grant funds and $2.6 billion of Prop. 1A 
construction funds to complete a segment running from Madera to Bakersfield Also 
included in SB 1029 was 1.1 billion of Prop. 1A HSR construction funds to be used for 
improvements to conventional rail segments in the “bookends” between San Jose and 
San Francisco and between Burbank and Los Angeles. These appropriations were 
intended to pave the way for high-speed rail service in these areas. The Legislature 
specifically required that expenditure of these funds required prior preparation of the 
funding plans required by §2704.08. 

This latter requirements is particularly problematic for the San Francisco - San Jose 
segment, where $600 million is proposed to help fund Caltrain's electrification project 
(with an estimated current total cost of approximately $2.1 billion) because §2704.08 
requires that the segment be fully funded, and that, when completed, it be suitable and 
ready for high-speed train operation. Not only is Caltrain's electrification project not yet 
fully funded, but it is undeniable that without further track and other improvements, it will 
not be suitable and ready for high-speed train operation. These deficiencies would 
appear to make it improper for Prop. 1 A construction funds to be used until there is full 
funding available to complete a high-speed rail ready segment. Those funds are 
nowhere to be found. 

Caltrain’s governing body, the Peninsula Corridor Joint Powers Board (“PCJPB”), with 
the cooperation of CHSRA, has now proposed a legislative “fix” for this problem. The 
proposed legislation, AB 1889, attempts to redefine (or in the bill’s word “clarify”) the 
language in Prop. 1 A so that “suitable and ready for high-speed train operation" would 



70 


mean only that the segment would be suitable and ready for high-speed train operation 
once additional improvements were funded and constructed. As an attorney who has 
spent considerable time studying the provisions of the California Constitution (Article 
XVI, Section 1 ) that govern the use of voter-approved bond funds, this bill appears to 
violate those constitutional requirements unless its proposed changes are first 
submitted to and ratified by California’s voters. 

II THE USE OF “CAP AND TRADE” AUCTION FUNDS TO FINANCE HIGH- 
SPEED RAIL CONSTRUCTION. 

In 2006, the California Legislature passed AB 32, the California Global Warming 
Solutions Act of 2006. Among other things, that act called upon the California Air 
Resources Board (“ARB”) to devise market-based compliance mechanisms to 
supplement direct regulation of greenhouse gas (“GHG") generation.^ In 2012, ARB 
finalized its decision to implement a market-based compliance mechanism as a “cap 
and trade" system. The system, which has also been implemented by the European 
Union and some other countries and states, is analogous to a system devised as part of 
the federal Clean Air Act. Under the cap and trade system, ARB establishes a "cap” on 
statewide GHG production. This cap is then allocated among the various sources of 
GHG emissions. For each source, there are financial penalties for exceeding the cap. 
However, a source can purchase additional allocations of GHG production, either from 
ARB or from other GHG producers who have either reduced their production of GHG or 
had previously purchased an additional allocation. The allocations are periodically 
auctioned off by ARB. Thus the idea is that as the cap is gradually lowered, GHG 
production will follow suit. In addition, the auctions will generate revenue that can be 
used to fund activities that will directly reduce GHG concentrations, either by reducing 
GHG production (e.g., developing more efficient cars, or ways of producing energy that 
produce less, or no GHG emissions), or by “sequestration” - that is, taking more GHG 
out of the atmosphere - for example by tree planting). 

As you may be aware, the cap and trade auctions have been challenged as being a tax 
on GHG producers that does not meet the California Constitution’s requirements for 
enacting a tax measure. That challenge is now pending in California’s Third District 
Court of Appeal. In addition a more specific legal challenge has been filed, focused on 
ARB’s decision to identify CHSRA’s high-speed rail construction as an acceptable use 
of funds collected through the cap and trade auctions. That challenge is based on 
ARB’s failure to take into account the many millions of tons of GHG released during the 
manufacture of the cement being used in the high-speed rail construction. The lawsuit 
alleges that, because of that cement production, building the high-speed rail system will 
actually result in a net increase in GHG emissions until far beyond AB 32's target date 
of 2020, a result directly contrary to the intent of AB 32. 

Finally, it must be noted that in between the legal uncertainty clouding the cap and trade 
system, the fact that the current legislative authorization for that system will expire in 


^ Greenhouse gas (GHG) is a shorthand used to designate various gaseous air 
constituents that absorb solar radiation and prevent its from leaving the earth. These 
gases contribute to the “greenhouse effect” where the Earth’s overall temperature 
increases, causing global climate change. While there are numerous contributing 
greenhouse gases, the largest single contributor is carbon dioxide. 



71 


2020, with the Legislature thus far unwilling to extend it"*, and the economic downturn of 
the “Great Recession,” which in itself greatly reduced California’s GHG emissions, 
recent cap and trade auctions have produced only meager amounts of revenue for the 
State. In the last two auctions, only approximately $18 million was produced. While the 
Legislature has approved a continuing appropriation of 25% of cap and trade revenue to 
the high-speed rail project, the revenue provided by the last two auctions amounted to 
only $4.5 million - a drop in the bucket compared to the billions the system will require 
for the construction of even an initial usable segment. This makes CHSRA current 
estimate of receiving $10 billion in cap and trade auction revenue appear highly 
unrealistic, even if it is found legally defensible. 

In short, CHSRA has, at the moment, no credible source of state funding to match its 
current federal HSIPR grants. I will leave it to CHSRA and its supporters to explain 
where that money will be found. 


Both nationally and internationally, momentum appears to be shifting towards 
revenue-neutral carbon taxes, where the proceeds collected are returned to the public 
and the business community in the form of lower tax rates and rebates. This would, of 
course, eliminate that tax revenue as a source for high-speed rail capital funding. 



72 


Exhibit A 



73 


1 

2 

3 

4 

5 

6 

7 

8 


Kahma D. Harris 
Attorney Geueral of California 
Tamar Pachter 

Supervising Deputy Atton^ey General 
Sharon L. O’Grady 
Deputy Attorney General 
State Bar No. 102356 
455 Golden Gate Avenue, Suite 1 1000 
San Francisco, CA 94102-7004 
Telephone- (415)703-5899 
Fax; (415)703-1234 
E-mail: Sharon.OGrady@doj.ca.gov 
Ailomeys for Defendants and Respondents 
California High-Speed Rail Authority, et ah 



9 I SUPERIOR COURT OF THE STATE OF CALIFORNIA 



10 


11 


12 


13 


14 


15 


16 


17 

F 

f 

IS 

« 

L 

19 

E 

20 

D 

21 


22 

B 

23 

Y 

24 


25 

F 

26 

A 

27 

X 

28 


COUNTY OF SACRAMENTO 




JOHN TOS, AARON FUKUDA; AND 
COUNTY OP KINGS, A POUTICAC 
SUBDFV'ISION OF THE STATE OF 
CALIFORNIA, 

Case No. 34-2011-00113919 

PETITION AND COMPLAINT 

Petitioners, 

V. 

HearingDate; February 11,2016 

Dept: 31 

judge; the Honorable Michael P, 

Kermy 

CALIFORNIA HIGH SPEED RAIL 
AUTHORITY; JEFF MORALES, CEO OF 
THE CHSRA; GOVERNOR JERRY 
BROWN; STATE TREASURER, BILL 
LOCKYER; DIRECTOR OF FINANCE, 

1 ANA MATASANTOS; SECRETARY 
(ACTING) OF BUSINESS, 
TRANSPORTATION AND HOUSING, 
BRUN KELLY; STATE CONTROLLER, 
JOHN CHIANG; AND DOES I-V, 
INCLUSIVE, 

Action Filed; February 14, 2011 

Respondents. 



l 

1 [Proposed] prdcrPenyiog Petition and CompSaint (3'i-20n'00n3919) j 



74 


1 The motion of Plainlife and P^tiooers JOHN TOS, AARON FUKUDA, and COUNTY 

2 OF KINGS for judgment on petition and complaint came on legulatly for hearing on February 1 1 , 

3 201 6, m Departmenl 3 1 of the Superior Court, the Honorable Michael P, Kenny presiding. 

4 Plaintiffs atid PetiUoners JOHN TOS, AARON FUKUDA, and COUNTY OF KINGS 

5 appeared by counsel Stuart M. Flashman, Esq. and Michael J. Brady, Esq. Defendants 

6 CALIFORNIA HIGH SPEED RAIL AUTHORITY (heremafter, “AUTHORITY"); JEFF 

7 MORALES. CEO OF THE AUTHORITY; GOVERNOR JERRY HROWN; STATE 

8 TREASURER JOHN CHIANG; DIRECTOR OF FINANCE MICHAEL COHEN; BRIAN 

9 KELLY, SECRETARY OF THE CALIFORNIA STATE TRANSPORTATION AGENCY; and 

10 STATE CONTROLLER BETTY YEE; appeared by Deputy Attorney General Sharon L. 

1! O’Orady and Supervising Deputy Attorney Tamar. Pachter. After bearing argument, the Court 

1 2 took the matter under. submission on February 1 1 , 20 1 6; 

1 3 The Cotfrt, having considered the papers, the Second Amended Administrative Record, 

14 matters as to which iheCourl has taken judicial notice es set forth herein, and the arguments of 

1 5 the parties at hearing, issued its Ruling on Submitlcd Matter: Motion for Judgment on Petition 

16 and Complaint (bereinaftef "Ruling”) on March 4, 2016, a copy of which is attached to this order 

17 as Exhibit A, and is incorporated fiilly herein by this reference. 

18 j Now, therefor, and for the reasons set forth in the Ruling, it is hereby ordered as follows: 

19 I 1. Plaintiffs' andPelitioners’RequestforJudicia!Notice,filedNovembet2, 2015, is 

20 GRANTED as to items 2, 3 and 4, and DENIED as to items 1 and 5. 

2 ! 2 . The Petition and Complaint are denied. 

22 IT IS SO ORDERED 


25 

26 

27 

28 

(Proposed} Order Denying Petifion and Complaint (3t-2Ql i -OOU3919) 





75 




Stuart M. Flaslunaii 


Michael). Brady 

Attonrey for Plaintiffs and Petitioners 



Attorneys for amicus Cui-lae Kings County 
Water District 


3 

[Proposed] Order Denying Pedfion and Compjaiai (34-201 1-001 13919) 




76 


Exhibit A 



77 


1 

2 

3 

4 

5 

6 

7 

8 
9 

10 

n 

12 

13 

14 
13 
16 
17 

15 

19 

20 
21 
22 

23 

24 
23 
26 

27 

28 



SUPERIOR COURT OF CALIFORNIA 
COUNTY OF SACRAMENTO 


JOHN TOS, AARON FUKUDA, and CascNo. 34-20n-fl»n$919-CU-WM-GOS 

COUNTY OF KINGS, 

PlaintifTs and Petitioners, 

V. RULING ON SUBMITTED MATTER; 

MOTION FOR JUDGMENT ON 

CALIFORNIA HIGH SPEED RAIL PETITION AND COMPLAINT 



The Legislature enacted the California High-Speed Rail Act in 1996. (Pub. Util. Code, § 
185000, ct soq)(hcreinaftcr, the “Rail Act.") The Rail Act created the High-Speed Rail Authority 
(hereinafter, the “Authority”) (Pub. Util. Code § 185012) and tasked it with developing and 
implementing an intercity high-speed rail service (hereinafter, the “HSR system"). (Pub, Util, 
Code §§ 185030, 185032.) 

In 2008, Proposition 1 A was placed before California voters to enact the “Safe, Reliable 

High-Speed Passenger Train Bond Act for the 21“ Century,” The Official Voter Information 

Guide for November 4, 2008 summarized the decision whether to enact Proposition 1 A as, 

“[t]o provide Californians a safe, convenient, affordable, and reliable 
alternative to driving and high gas prices; to provide good-paying jobs and 

1 

RULING ON SUBMITTED MATTERS 
CASE NO. 34.M1 l-oei l39l9-CU-WM-aDS 



78 


1 

2 

3 

4 

5 

6 

7 

8 

9 

10 
11 
12 

13 

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improve California’s economy while retiucing air pollution, global warming 
greenhoiise gases, and onr depei^ence on foreign oil, shall $9.95 billion in 
bonds be issued to establish a clean, efficient high-speed train service linking 
Southern California, the S^ramenU^Sw Joaquin Valley, and the San 
Francisco Bay Area, with at least 90 percent of bond binds spent for specific 
projects, wth private and public m^hing funds required, including, but not 
limited to, federal funds, ^ds fiora revenue bonds, and local funds, and all 
bond funds subject to independent audits?” (AG 000003)(emphasis added.) 


The Official Voter Information Guide further indicated that a “yes” vote meant “[t]he 
state could sell $9.95 billion in 'g«ieral obligation bonds, to plan and to partially fund the 
construction of a high-speed train system in California, and to make capital improvements to state 
and local rail services.” A "no” vote meant "[t]he state could not sell $9.95 billion in general 
obligation Ixmds for these purposes.” (AG 000003.) The description of Proposition 1 A and 
arguments for and against it, were followed by “an Overview of State Bond Debt.” (AG 000008- 

9.) 


California voters approved Proposition 1 A (hereinafter. The “Bond Act”). (Streets and 


16 


Highways Code §§ 2704, ei seq.^) The Bond Act is in Division 3 of the Streets and Highways 


17 


Code, which Division concerns the "Apportionment and Expenditure of Highway Funds.” 


18 

19 

20 
21 


The Bond Act identifies requirements the HSR system must meet prior to receipt of the 
funds, including that the HSR system “shall be designed to achieve the following 
characteristics.,. 


22 

23 

24 

25 

26 

27 

28 


(b) Maximum nonstop service travel times for each corridor that shall not 
exceed the following: 

(1) San Francisco-Los Angeles Union Station: two hours, 40 
minutes. 

(2) Oakland-Los Angeles Union Station: two hours, 40 minutes. 

(3) San Francisco-San Jose: 30 minutes. . . 

(c) Achievable operating headway (lime between successive trains) shall be 
five minutes or less... 


’ A!! further slatuiory refe^nces are to the Streets and Highways Code, unless otherwise indicated. 

2 


RUUNG ON SUBMITTED MATTERS 
CASE m. W-aOH-OOI 139I9-CU*WM-GDS 


79 


1 

2 

3 

4 

5 

6 

7 

8 

9 

10 
11 
12 

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(g) In order to redu<^ impact on immunities and the environment, the 
alignment for the high-speed hain system shall follow existing transportation 
or utility corridors to the extent feasible and shall be financially viable, as 
determined by the authority.” (§ 2704,09.) 

The Authority must prepare, publish, adopt, and submit to the Legislature, a business plan, 
which they must review and resubmit every two years. (Pub. Util. Code § 185033.) Before 
committing appropriated bond fimds to construction, the Authority must approve and submit a 
detailed funding plan concerning the specific corridor or usable segment, to the Director of 
Finance, the peer review group established pursuit to section 1 85035 of the Public Utilities 
Code, and the policy committees with jurisdiction over transportation matters and the fiscal 
committees in both houses of the legislature. (§ 2704.08.) The funding plan must certify tliat the 
Authority has completed all necessary project level environmental clearances necessary to 
proceed to construction. (§ 2704.08, subd. {c)(2)(k).) The Authority cannot commit bond hmds to 
constniction until the Director of Finance concludes that “the plan is likely to be successfully 
implemented as proposed.” (§ 2704.08, subd. (d).) 

In April 2012 and April 2014, the Authority approved, published, and submitted its 2012 
and 2014 Business Plans to the Legislature. (AG 001931, AG 011047.) These plans indicate that 
Phase I of the system is a “blended system” in which conventional and HSR trains will shate 
tracks, stations, and other facilities. (AG 001936, 001940, 001941, 00I94S, 001971-001974, 

01 1055, 01 1060, 011062.) In 2013, the Legislature passed SB 557 (enacting § 2704.76) which 
provides, 

“(b) Funds appropriated pursuant to Items 2660-104-6043, 2660-304-6043, 
and 2665-104-6043 of Section 2.00 of the Budget Act of 2012, to the extent 
those funds are allocated to projects in the San Francisco to San Jose segment, 
shall be used solely to implement a rail system in that segment that primaniy 
consists of a two-track blended system to be used jointly by high-speed rail 
trains and Peninsula Joint Powers Board commuter trains (Caltrain), with the 
system to be contained substantially within the existing Caltrain right-of- 
way.” (emphasis added.) 

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Consequently, the fiinds appropriated for die San Francisco to San Jose segment are for 
consfjuction of a blended system. 

Plaintiffs filed this matter on Novemtwr 14, 20U, claiming that the high-speed rail 
project is not eligible to receive Bond Act funds. Accordingly, Plaintiffs allege it would be 
illegal to give Defendants these funds to construct the subject high-speed rail system in the 
Central Valley. 

One of Plaintiffs’ initially filed claims was previously resolved in this matter via separate 
trial and appeal to the Third District Court of Appeal. (Califorma High-Speed Rail Authority v. 
Superior Court (2014) 228 Cal.App-4th 676.) The Court of Appeal directed this Court to enter 
judgment, “validating the authorization of the bond issuance. . .Further challenges by real parties 
in interest to the use of bond proceeds are premature.” The court also ordered this Court to vacate 
its ruling requiring the Authority to redo the preliminary section 2704,08, subdivision (c) funding 
plan after the Legislature appropriated the bond funds. {Id. at 684.) In ruling on that matter, the 
Court of Appeal noted, “[j]udicial intrusion into legislative appropriations risks violating the 
separation of powers doctrine.” {Id. at 714.) With regard to Proposition I A, the court found, “the 
Bond Act does not curtail the exercise of the Legislature’s plenary authority to appropriate.” 

The remaining claims in tlus matter are, per letter stipulation dated January 8, 2014: 

1 . “The currently proposed high-speed rail system does not comply with the 
requirements of Streets and Highways Code § 2704.09 in that it cannot meet 
the statutory requirement that the high-speed train system to [sic] be 
constructed so that the maximum nonstop service travel time for San 
Francisco - Los Angeles Union Station shall not exceed 2 hours and 40 
minutes; 

2. The currently proposed high-speed rail system does not comply with the 
requirements of Streets and Highways Code § 2704.09 in that it will not be 
financially viable as determined by the Authority and the requirement under § 
2704.08(c)(2)(J) that the planned passenger service by the Authority in the 
corridors or usable segments thereof will not require a local, state, or federal 
operating subsidy; 

3. The currently proposed “blended rail” system is substantially different from 

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the system whose required charact^istics were de.scribed in Proposition 1 A, 
and legislative apprepri^on towards constructing this system is therefore 
an attempt to modify the terms of that ballot measure in violation of article 
XVI, section 1 of the Califonua Constitution and therefore must be declared 
invalid; 

4. If Plaintiffs are successftU in any of the above three claims. Proposition 1 A 
bond funds will be unavailable to consttuct any portion of die Authority’s 
currently-proposed high-speed rail system. Under those circumstances, the 
$3.3 billion of federal grant funds will not allow construction of a useful 
project. Therefore, under those circumstances the Authority’s expenditure of 
any portion of the S3.3 billion of federal grant fimds towards the construction 
of the currently-proposed system would be a wasteful use of public funds and 
would therefore be subject to being enjoined under Code of Civil Procedure § 

526a.” 

The parties briefed these issues and dien presented oral argument on February 1 1, 2015. 

At the close of the hearing, the Court took the matter under submission. 

n. Standard of Review 

This case involves numw)us claims concerning the compliance of the HSR system as 
currently proposed with the requirements of the Bond Act. 

The interpretation of statutes in such a case is an issue of law on which the court exercises 
its independent judgment. (Sqq, Sacks v. Ofy of Oakland (2010) 190 CaLApp.4th 1070, lOS2.)In 
exercising its independent judgment, the Court is guided by certain established principles of 
statutory construction, which may be summarized as follows. 

The primary task of the court in interpreting a statute is to ascertain and effectuate the 
intent of the Legislature. (See, Hsuv.Abbara(\995)9Ca.\A^ 863, 871.) As this matter 
involves the interpretation of statutes approved by the voters, “ascertaining the will of the 
electorate is paramount.” {Cal. Highspeed Rail Authority, 228 Cal.App.4th at 708.) “Statutes 
adopted by the voters must be construed liberally in favor of the people’s right to exercise their 
reseivai fxjwers, and it is the duty of the courts to jealously guard the right of the people by 
resolving doubts in favor of the use of those reserved powers.” {Id . ) 


However, whether a statute is enacted by the voters or passed by the Legislature, the same 
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basic rules of statutory construction apply. {Id.) The starting point for the task of interpretation is 
the wording of the statute itself, because these words generally provide the most reliable indicator 
of legislative, or elector, intent. (See, Mta-phy v. Kenneth Cole Productions (2007) 40 Cal.4th 
1094, 1103.) The language used in a statute is to be interpreted in accordance with its usual, 
ordinary meaning, and if there is no ambiguity in the statute, the plain meaning prevails. (See, 
People V. *5^0^(1997) 16 CaL4th 1210, 1215.) The court should give meaning to every word of 
a statute if possible, avoiding constructions that render any words surplus or a nullity. (See, Reno 
V. Baird (1998) 18 Cai.4th 640, 658.) Statutes should be interpreted so as to give each word some 
operative effect. (See, Imperial Merchant Services, Inc. v. Hunt (2009) 47 Cal. 4th 38 1 , 390.) 

Beyond that, the Court must consider particular statutory language in the context of the 
entire statutory scheme in which it appears, construing words in context, keeping in mind the 
nature and obvious purpose of the statute where the language appears, and harmonizing the 
various parts of the statutory enactment by considering particular clauses or sections in the 
context of the whole. (See, People v. Whaley {200Z) 160Cal.App,4th779, 793.) 

To the extent this matter requires review of administrative actions taken by the Authority, 
the Court must determine whether those actions constitute an abuse of discretion, namely whether 
the action was aibitrary, capricious, entirely lacking in evidentiary support, unlawful, or 
procedurally unfair. (See Khan v. Ix)s Angeles City Employees' Retirement System (2010) 187 


Cal.App.4th 98,105-06.) 


ni. Discussion 


A. Requests for Judicial Notice 


Plaintiffs have filed a request for judicial notice concerning five documents. Defendants 
have filed objections to Hems 1 and 5. 


Item 1 requests the Court lakejudicial notice ofthe fact that, “beginning in 2011, 


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Congressional appropriations have provided no funding for the California High-Speed Rail 
Authority or its project, or any other high-speed rail project, and in fact have rescinded prior 
funding for high-speed rail projects.” Defendants object on the basis that this is irrelevant to any 
material issue in this matter, contains evidence that was not before the Authority when if made its 
decision (pursuant to Western States Petroleum Assn. v. Superior Court (1995) 9 Cal,4th 559), 
and that the proffered fact is not the proper subject of judicial notice. The Court agrees, based on 
its analysis herein, that this fact is not relevant to any materia! issue currently ripe for review in 
this matter. 

item 5 requests judicial notice of mapping by the California Department of Transportation 
of California urban areas, which mapping has been integrated into a set of online databases 
accessible through Google Earth. Defendants object on the basis that the maps are irrelevant to 
any material issue, the evidence was not properly before the Authority, the evidence is proffered 
to contradict the Authority’s experts. Plaintiffs failed to comply with Rule of Court 3.1306, 
subdivision (c), and Plaintiffs improperly seek judicial notice of the accuracy of the maps. The 
Court agrees, based on its analysis herein, that this information is not relevant to any issue that is 
currently ripe for review. 

The request for judicial notice is GRANTED as to items 2, 3, and 4, and DENIED as to 
items 1 and 5. 

B. The Purpose of the Bond Act 

Central to this matter is the answer to the following question: Does the Bond Act simply 

provide bond financing, conditional upon the satisfaction of certain design criteria, or does it 

reach further, providing the sole authority by which a high-speed rail system may be constructed 

by the Autliority {regardless of the source of funding)? Plaintiffs urge this Court to read section 

2704.04, subdivision (a) as a declaration of the Legislature’s intent that any HSR system huiit in 

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CASE NO. 34-201 1-001 13919-CU-WM-ODS 



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California must comply wth the Bond Act’s pre-requisites. Defendants argue, instead, that the 
Bond Act only prohibits the use of Bond Act funds until the Authority has proven compliance 
with the system described therein. Consequently, Defwdants contend, to the extent the Authority 
is moving forward with an HSR system utilizing non-Bond Act ftmds, there is no statutory 
prohibition to these actions. 

In analyzing the meaning of the Bond Act, the Court looks first to the plain language of 

the relevant statutes. Section 2704.04, subdivision (a) provides, 

“It is the intent of the Legislature by enacting this chapter and of die people of 
California by approving the bond measure pursuant to this chapter to initiate 
the construction of a high-speed train system that connects the San Francisco 
Transbay Terminal to Los Angeles Union Station and Anaheim, and links the 
state's major population centers, including Sacramento, the San Francisco Bay 
Area, the Central Valley, Los Angeles, the Inland Empire, Orange County, 
and San Diego consistent wiUi the authority’s certified environmental impact 
reports of November 2005 and July 9, 2008.” 

Section 2704.04 is located within Streets and Highways Code Division 3, 

“Apportionment and Expenditure of Highway Funds,” Chapter 20, “Safe, Reliable High-Speed 
Passenger Train Bond Act for the 21“ Century,” Article 2, “High-Speed Passenger Train 
Financing Program.” Section 2704.04 is titled, “Legislative intent; Use of net proceeds from sale 
of bonds ” Alt of these titles indicate that the Bond Act, including section 2704.04, addresses the 
use of funds to construct a HSR system. 

Such an interpretation is supported by the information provided to the voters to assist in 
determining whether to vote “yes” or “no” on Proposition 1 A. The summary in the voter 
information guide indicated that the voters needed to decide, ‘'...shall S9.95 billion in bonds be 
issued to establish a clean, efficient high-speed train service linking Southern California, the 
Sacraraento/San Joaquin ValJey, and the San Francisco Bay Area.. (AG 000003)(emphasis 
added.) The descriptions of what a “yes” or “no” vote would mean indicate that the result of the 
vote would determine whether the state could sell $9.95 billion in general obligation bonds in 


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order to construct an HSR system. {Id) There is no discussion that a “yes” vote on Proposition 
i A prohibits the Legislature from uiiltang its appropriation powers to construct an HSR system 
using funds other than the $9.95 billion in general obligation bonds. 

As the Court of Appeal held in the prior trial on this matter, “|j]udicial intrusion into 
legislative appropriations risks violaUng the separation of powere doctrine.” (Cal High-Speed 
Rail Authority, 228 Cal.App.4th at 714.) ^Tf there is any doubt as to the Legislature’s power to 
act in any given case, the doubt should be resolved in favor of the Legislature’s action.” (Id.) The 
Court of Appeal further noted, “die only judicial standard commensurate with the separation of 
powers doctrine is one of strict construction to ensure that restrictions on the Legislature are in 
fact imposed by the people rather than by the courts in the guise of interpretation.” (M){ciiing 
Schabarum v. California Legislature {\99^') 69 Cai,App.4th 1205, 1218.) With regard to 
PfopOvSition 1 A, the court read the plain language of the statute and found, “the Bond Act does 
not curtail the exercise of the Legislature’s plenary authority to appropriate."^ 

There is nothing in the Bond Act or in the voter information guide that dictates the 
Legislature cannot use non-Bond Act funds to construct or plan an HSR system absent a showing 
that the system complies with the Bond Act requirements. The Bond Act did not establish the 
Authority, the Rail Act did. The Bond Act is, consequently, not the source of the Authority’s 
responsibilities or “powers," which arc described in the Rail Act, via Public Utilities Code 
section 1 85034. The Bond Act is simply that: a Bond Act. The Authority may not spend any of 
the $9.95 billion in general obligation bonds absent a showing of compliance with the numerous 
requirements described in the Bond Act. Additionally, all parties agree that Bond Act proceeds 
have not been used in the challenged segments and are not currently at issue, as the Authority has 

^ While dlls niling concerned vvhetbCT the Legislanire was prohibited from appropriating fiinds in the absence of a 
preliminary funding plan, die ^scncc of a clear directive to abdicate apjHopriation power with regard to non-bond 
sources leads to the same conclusion here. 

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not prepared the required funding plans pursuant to section 2704.08. (Opening Brief, p, 3.) 

The Court finds that die Bond describes criteria that must be met in order to finance 
an HSR system wth Bond Act funds. Tlw Bond Act does not set “restrictions on what type of 
system [the Authority] could constiut^ regardless of its funding source.” (Opening Brief, p. 1 .) 

It is with this determination in mind that the Court now turns to Plaintiffs’ challenges to 
the HSR system as currently proposed. 

C. The Blended System 

i. 2005 and 2003 BIRs 

Plaintiffs argue the proposed “blended system” is not consistent with the Bond Act 
because it fails to comply with the Authority’s certified Environmental Impact Reports of 
November 2005 and July 9, 2008, as required by section 2704.04, subdivision (a).^ Because the 
Legislature has mandated the blended system via SB 557 (enacting § 2704.76), neither party 
argues that this issue is not ripe for review. Accordingly, the Court considers whether the 
statutorily mandated blended system violates the Bond Act as approved by the voters. 

Section 2704.04, subdivision (a) provides, 

“It is the intent of the Legislature by enacting this chapter and of the people of 
California by approving the bond measure pursuant to this chapter to initiate 
the construction of a high-speed train system that connects the San Francisco 
Transbay Terminal to Los Angeles Union Station and Anaheim, and links the 
slate’s major population centers, including Sacramento, the San Francisco Bay 
Area, the Central Valley, Los Angeles, the Inland Empire, Orange County, 
and San Diego consistent with the authority's certified environmental impact 
reports of November 2005 and July 9, 2008. ” (emphasis added.) 

This section, Plaintiffs argue, evidences the Legislature and voters’ intent and 

expectations that the HSR system will be consistent with the 2005 and 2008 ElRs. The 2005 EIR 

includes cross-sections for the “Caltrain Sh^d-Use Alignment” showing four tracks throughout 


^ Defendants maintain Plaintiffs may not aigoe that the Wended system fails to comply because this claim is rwt 
squarely within the January 8, 2014 stipulated issues. The Court disagrees and finds that number 3 may be interpreted 
broadly to allow for Plaintiffs’ arguments that the blended system cannot comply with the Bond Act. 

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CASE NO. 34-201 l-OOi 13919-CU-WM-GDS 



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the San Francisco to San Jose segment. (H7.0n060-H7.0n074.) TTie 2008 EIR includes a set of 
typical cross sections for the San FraiK:i«M> to San Jose segment, again showing four tracks. 
(H7.0i3 1 58 - H7.QI 3 \ 75.) The 2008 EIR further provides that "[f]he Draft Program EiR.EIS 
analyzes one alignment option between San Francisco and San Jose along the San Francisco 
Peninsula that would utilize the Caltrain rail ri^t-of-way, and share tracks with express Caltrain 
commuter rail services.. .The alignment between San Francisco and San Jose is assumed to have 
4~trach, with the two middle tracks being shared by Caltrain and HST and the outer tracks used 
by Caltrain...” (H7.014212Xemphasts added.) 

However, in 2012, the Authority modified the 2005 and 2008 EIRs via the 2012 Bay Area 
to Central Valley Partially Revised Final Program EIR. An initial blended system (two-tracks 
shared by Caltrain and HSR trains) in the San Francisco Peninsula is discussed at length in this 
2012 EIR. (H7.018234-35, H7.01 8239-40.) The issue before the Court is whether section 
2704.04, subdivision (a) requires the four-track alignment disciBsesd in the 2005 and 2008 EIRs, 
or whether section 2704.04 must be read in conjunction with section 2704,06 to allow for project 
modification via subsequently modified environmental studies. 

Section 2704.06 is titled, ‘‘Availability of proceeds for planning and capital costs,” and 
provides, 

“The net proceeds received from the sate of nine billion dollars 
($9,000,000,000) principal amount of bonds authorized pursuant to this 
chapter, upon appropriation by the Legislature in the annual Budget Act, shall 
be available, and subject to tiiose conditions and criteria that the Legislature 
may provide by statute, for (a) planning the high-speed train system and (b) 
capital costs set forUi in subdivision (c) of Section 2704.04, consistent with 
the authority's certified environment^ impact reports of November 2005 and 
July 9, 2008, as subsequently modified pursuant to environmental studies 
conducted by the authority.'^ (emphasis added.) 

Defendants argue section 2704.04, subdivision (a) must be read in conjunction with 

2704.06 in order to give meaning to the words “or subsequently modified pursuant to 

environmental studies conducted by the authority” To hold that the HSR system can only qualify 

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for Bond Act funds if it meets the design proposed by the 2005 and 2008 EIRS would read the 
modification language out of section 2704.06. Defendants also contend the Legislature has 
statutory and Constitutional authority to amend the Bond Act to require a blended system. 

When considering a statatoiy scheme, the Court should not construe individual statutes in 
isolation, but instead should view the Act as a whole. (See, People v. Whaley (2008) 1 60 
Cal App.dth 779, 793.) The court should give meaning to every word of a statute if possible, 
avoiding constructions that render any words surplus or a nullity. (See,^enov. Sot>d(1998) IS 
Cai.4th 640, 658.) Statutes should be interpreted so as to give each word some operative effect 
Imperial Merchant Services, Inc. v. Hunt (2009) 41 Cal.4th 381, 390.) 

Plaintiffs argued at length during oral argument that section 2704.06 refers only to the 
receipt of bond funds, while section 2704.04 provides the general legislative intent that the HSR 
system comply with the 2005 and 2008 ElRs. Because the schematics included in the 2005 and 
2008 EIRs refer only to four-track systems. Plaintiffs argue, a two-track blended system violates 
the genera! Legislative intent limiting any HSR system the Authority completes. This argument is 
contrary to the Court’s finding above that the Bond Act concerns itself solely wth the use of 
Bond Act funds. As sections 2704.04 and 2704.06 must be read in the context of the use of Bond 
Act funds, they must be read together, giving meaning to every word. 

Section 2704.06 allows expenditure of Bond Act funds on a system that is “consistent 
with the authority's certified environmental impact reports of November 2005 and July 9, 2008, 
as subsequently modified pursuant to environmental studies conducted by the authority." To read 
section 2704.04 as urged by Plaintiffs means that Bond Act funds cannot be expended on a 
system that complies with a modified EIR if it is not consistent with the 2005 and 2008 EIRs. 
Essentially, Plaintiffs ask this Court to read the words “as subsequently modified pursuant to 
environmental studies conducted by the authority” out of the Bond Act. Such a reading is 

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contrary to the direction that the Court ^ould avoid constructions that render any words surplus 
or a nullity. 

Reading section 2704.04 and 2704.06 together, the Court finds that the Authority may use 
Bond Act funds to construct an HSR systwn that Is compliant with the 2005 and 2008 EIRs, as 
subsequently modified. As the 2012 Bay Area to Central Valley Partially Revise Final Program 
EIR modified the subject EIRs to provide for a two-track blended system, in conformance with 
the provision of section 2704.06, the requirement of a blended system via SB 557 does not violate 
the Bond Act. 

ii. Minimum headway requirement and trip-time between San Francisco and 
San Jose 

IktendanLs argue Plaintiffs’ ciaim.s concerning the blended system headway and trip-time 
requirements are not ripe. The Court will consider both claims together. 

Plaintiffs contend the blended system violates the Bond Act because it cannot meet the 
system requirements for operating headways. Section 2704.09, subdivision (c) provides, that the 
“{t]he high-speed train system to be constructed pursuant to this chapter shall be designed to 
achieve the following characteristics. .. Achievable operating headway (time between successive 
trains) shall be five minutes or less.” Plaintiffs argue the blended system can only accommodate a 
maximum of ten trains per hour, four of which would be HSR trains. (AG 013028, 013074.) 
Accoidingiy, there is a fifteen-minute delay between HSR trains on the blended system, in 
violation of section 2704.09, subdivision (c). 

Defendmtts argue that this, and the remainder of Plaintiffs’ arguments are not yet ripe, as 
the system design Plaintiffs challenge, “today is not final, but continues to evolve and change” 
making the claims not reviewable. (Opposition, p. 13.) Defendants further contend, “[w]hen the 
Authority commits bond funds to a specific plan pursuant to section 2704.08, subdivision (d), the 

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validity of those expenditures will be levicw^le.” {Id.) Defendants argue, “[t]he only fmal design 
decisions the Authority has made involve the Merced-Fresno and Fresno-Bakersfield segments of 
the system, which Plaintiffs do not challenge” (A/, atp. 15,FN11.) 

The evidence before the Court indicates that the blended HSR system, as currently 
proposed, can accommodate ten trains in an hour. This allows for one train approximately every 
six minutes, with a delay between HSR trains of approximately fifteen minutes. (AG 01 3028, 

0 1 3074.) Plaintiffs argue this demonstrates that the Authority cannot currently prove the blended 
HvSR system complies with Section 2704.09, subdivision (c)’s headway requirement Defenders 
contend that these claims are premature, and, diat if they are ripe, the definition of “trmn” 
includes non-HSR trains, and with imminent technology, the system will be able to improve its 
six-minute headway to the required five-rainute headway. Consequently, Defendants argiK the 
system is “designed to achieve” five minute or less operating headway between trains, even 
though these trains are not all HSR trains; 

With regard to operating time between San Francisco and San Jose, section 2704.09, 
subdivision (b)(3) requires the system to be designed to achieve maximum nonstop service travel 
time that shall not exceed thirty minutes. In January 2013, the Authority’s consultants perfonned 
a simulation analysis to determine whether the blended system could currently comply widi this 
requirement. (AG 022899.) Using a travel speed of 1 10 mph, the memorandum concluded the 
nonstop travel time would be 32 minutes. Using a speed of 125 mph, the travel time could be 
reduced to 30 minutes. Via a revised February 7, 2013 memorandum, the Authority’s consultants 
concluded that, using a travel time of 1 10 mph the nonstop travel time would be 30 minutes. (AG 
022912.) There is no clear explanation for this change in conclusions, other than an emmi 
exchange requesting that the consultants disregard the 125 mph proposal. (AG 022909.) 

On February 1 1, 2013, this 30-minute travel time at 1 10 mph was presented to the 
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Authority via a memorandum. The memorandum indicated that “[f]urther improvements nmy be 
achievable through improved train performance, use of tilt technology, more aggressive 
alignments and higher maximum speeds ” (AG 017435.) 

Most troubling about this stidy is the feet that the Authority reli«i on a 4^^ and King 
Caltrain Station as the location in San Francisco from which the travel time should be calculated. 
(AG 013030, AG 022903, AG 013038.) The Autltority acknowledged this fact during oral 
argument on this matter, and argued that Action 2704.09, subdivisions (b)(1) and (3) do not 
require a specific San Francisco terminal, only requiring that the calculations be l^tween “Smi 
Francisco” and the indicated destination. Plaintiffs argue the Bond Act requires the trip to start at 
the San Francisco Transbay Terminal, a location that is 1 .3 miles further north, thus extending the 
time it will take a train to complete the required distance. 

Section 2704.04, subdivision (b)(2) provides that “Phase I of the high-speed train project 
is the corridor of the high-speed train system between San Francisco Transbay Terminal and Los 
Angeles Union Station and Anaheim.” Subdivision (b)(3) identifies specific high-speed train 
corridors, and lists, “(B) San Francisco Transbay Terminal to San Jose to Fresno.” Subdivision (a) 
identifies that the purpose behind the Bond Act is “construction of a high-speed train system that 
connects the San Francisco Transbay Terminal to Los Angeles Union Station and Anaheim. . 
Consequently, it appears that the intent of the Bond Act was for the system to extend, in San 
Francisco, to the Transbay Tcnninal, not stop 1.3 miles short at a 4* and King Caltrain Station. 
This specific language and indication of intent does not conflict with a general referral to “San 
Francisco” in section 2704.09 subdivision (b)(1) and (3). It is reasonable to interpret this 
reference to “San Francisco” as indicating the Transbay Terminal identified as the intended San 
Francisco location in section 2704.04, 

It appears, at this time, that the Authority does not have sufficient evidence to prove the 
15 


RULING ON SUBMi riEO MAITERS 
CASE NO. M-^1 l-OOl i39t9-CU-WM-GDS 



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blended system can currently comply with all of the Bond Act requirements, as they have not 
provided analysts of trip time to die San Francisco Transbay Terminal, and cannot yet achieve 
five-minute headways (even allowing for the definition of “train" to include non-HSR trains). 
However, as Plaintiffs acknowledged during oral argument, the Authority nu^ be able to 
accomplish these objectives at some point in the future. This project is an ongoing, dynamic, 
changing project. As the Court of Appeal noted, “[bjecause there is no final funding plan and the 
design of the system remains in flux. . .we simply cannot determine whether the project wdli 
comply with the specific requirements of the Bond Act. . ." (California High-Speed Rail 
Authority, 228 Cal.App.4th at 703.) 

There is no evidence currently before the Court that the blended system vill not comply 
with the Bond Act system requirements. Although Plaintiffs have raised compelling questions 
about potential future compliance, the Authority has not yet submitted a funding plan pursuant to 
section 2704.08, subdivisions (c) and (d), seeking to expend Bond Act funds. Thus, the issue of 
the project’s compliance with the Bond Act is not ripe for review. Currently, all that is before the 
Court is conjecture as to what system the Authority will present in its request for Bond Act funds. 
This is insufficient for tlie requested relief. 

D. Pla intiffs’ remaining claims 

Plaintiffs’ remaining claims include: 

1 . The Authority has not proven that, pursuant to section 2704.09, subdivision (g), the 
HSR system will be financially viable, 

2. The HSR system as proposed cannot meet the San Ftancisco-Los Angeles travel time 
required by the Bond Act. 

For the reasons discussed above, the Court finds these claims tue also not ripe for review. 

As the Court determined first in this ruling, the Bond Act is just that: a bond act providing for 

bond financing of an HSR system. Until the Authority attempts to utilize Bond Act funds, 

pursuant to the prerequisites identified in section 2704.08, the financial viability and San 

16 


Rta.lNG ON SUBMITTED MATTERS 
CASE NO, 3t-J01l-00n»19-CU-WM-aDS 



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Francisco-Los Angeles corridor designs remain in flux. Tlie record provides, for example, that the 
Authority continues to focus on trip time and that the analysis will change as the project 
changes. (AG 017554, AG 017556.) 

As this Court has jweviously indicated, the key question at this time is whedier the 
Authority has taken any action that precludes compliance with the Bond Act. Plaintiffs have 
failed to provide evidence at this time that the Authority has taken such an action. This is because, 
as of today, there are still too many unknown variables, and In absence of a funding plan, too 
many assumptions that must be made as to what the Authority’s final decisions will be. While 
Plaintiffs have produced evidence that raises substantial concerns about the currently proposed 
system’s ability to ultimately comply with the Bond Act, the Authority has yet to produce the 
funding plan that makes those issues ripe for review. 'Ihus, Plaintiffs’ claims must be denied. 

IV. Conclusion 

Via Proposition 1 A, the voters enacted the “Safe, Reliable High-Speed Passenger Train 
Bond Act for the 2 1 Century.” This Bond Act provided for financing of a high-speed rail system, 
to be designed and constnictcd by the High-Speed Rail Authority (established by the 1996 Rail 
Act). In order to qualify for financing, the Authority must be able to prove the system it proposes 
can attain certain standards, including perfonnance times, and financial viability. While the 
blended system does not appear to have betm initially considered by the 2005 and 2008 ElRs, 
section 2704.06 allows for a system that complies with the EIRs, as modified. The blended 
system complies with the 2012 modification, thus complying with the Bond Act requirements. 

As of the date of this niling, the Authority has not submitted a section 2704.08 funding 
plan, and consequently has not sought to utilize any Bond Act funds on tlie challenged system. To 
the extent non-Bond Act funds are being expended, Plaintiffs have not identified any basis upon 
which this Court should enjoin the use of said funds. The HSR system is not fimil, but instead 

17 


RULtNG ON SUBMim-D MATTERS 
CASE NO. 34-201 1-001 1391 9-CU- WM-GDS 


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continues to evolve and change. As such, the issue of whether the HSR system complies with the 
Bond Act is not ripe for review. 

The Petition and Complaint are DENIED. 

in accordance with Local Rule 1.06, counsel for Defendants is directed to prepare an order 
denying the petition and complaint, incorporating this ruling as an exhibit to the order, and a 
separate judgment; submit them to counsel for Plaintiffs for approval as to form in accordance 
with Rule of Court 3.1312(a); and thereafter submit them to the Court for signature and entry in 
accordance with Rule of Court 3.13 12(b). 

DATED: March 4, 2016 



Judgf MlCHAEL P. K^Y 
Superior Court of California, 
County , of Sacramento ' 


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RULING ON SUBMITTBI) MATTERS 
CASE NO. 34-20114101 139I9-CU-WM-GDS 



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1 CERTIFICATE OF SERVICE BY MAILING 


2 

(C.CJP. Sec. 1013a{4)) 

3 

I, the undersigned deputy clerk of the Superior Court of California, County of 


Sacramento, do declare under penalty of perjury that I did this date place a copy of the above- 

4 

entitled RULING ON SUBMITTED MATTER in envelopes addressed to each of the parties, or 

S 

their counsel of record as stated below^ with sufficient postage affixed thereto and deposited the 

6 

7 

8 

same in the United Slates Post Office at 720 9**" 

Street, Sacramento, California. 

STUART M. FLASHMAN 

MICHAEL J. BRADY 


Attorney at Law 

Attorney at Law 

9 

5626 Ocean View Drive 

Oakland, CA 94618-1533 

1001 Marshall Street, Suite 500 

Redwood City, CA 94063-2052 

10 


!1 

SHARON L. O’GRADY 

TAMAR PACHTER 

12 

Deputy Attorney General 

SupeiT'ising Deputy Attorney General 

455 Golden Gate Avenue, Ste 1 1000 

455 Golden Gate Avenue, Ste 1 1000 

13 

San Francisco, CA 94102-7004 

San Francisco, CA 94102-7004 

14 



15 

RAYMOND L. CARLSON, ESQ. 

THOMAS FELLENZ 

Griswold LaSalle Cobb Dowd & Gin LLP 

Chief Legal Counsel 

16 

1 1 1 E. Seventh Street 

770 L Street, Suite 800 

Hanford, CA 93230 

Sacramento, CA 95814 

17 



18 


Superior Court of California, 

County of Sacramento 

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A 

20 

Dated; March 4, 2016 

By: S.LEE 


Deputy Clerk 

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RULING ON SUBMITTED MATTERS 

CASE NO. 34-20!l-WIl3919-ai-WM-GDS 



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Page 1 of 3 


Testimony of Robbie Hunter 
Congressional Hearing on High Speed Rail 
San Francisco. Monday, Ausust 29. 2016 


Good Morning. 

My name is Robbie Hunter, and I am the President of tlte State Building and Construction Trades 
Council of California. I am an iron worker by trade, and spent 27 years working in the field 
building skyscrapers and bridges throughout California. 

Our council represents 400,000 skilled and trained California construction workers, including 
48,000 apprentices that have graduated or the equivalent from California high schools. 

Each and every one of these workers work for private construction companies building our 
harbors, airports, water treatment plants, freeways, transit systems, dams, as well as the vast 
majority of major private commercial and residential projects throughout the state of California. 

These contractors need a streamlined, highly trained, competent work force to compete, using the 
least amount of workers, building projects in the shortest time frame, done once, done right, 
under the lowest bid. 

The work force that wc represent drives the economy of California, They set aside a portion of 
their hourly wage for their pension and medical benefits and even in retirement are not a burden 
on the state or federal taxpayers. 

And I am very proud to report that at this very moment, several hundred of these workers, who 
are residents of the Central Valley are on the job building the high speed rail in the Central 
Valley. 

This is an area where we have had 60 percent unemployment among construction workers and 
traditionally has had some of the highest unemployment statewide in the genera! population. 

Now these workers are building the High Speed Rail system that will transform the Valley and 
all of California. 

Of course, 1 am very happy that all those workers are earning paychecks, supporting their 
families, and driving the economy. 

Bui I am most gratified that they are creating a third mode of mass transportation, something that 
California desperately needs right now, and that will greatly benefit the people of this state for 
generations to come. 

Furthermore, the project is being built efficiently and economically. The best value bids for the 
first construction packages have ranged from 13 to 45 percent below the engineer’s estimates, 
resulting in savings of hundreds of millions of dollars so far. 



97 


Page 2 of 3 


Decades from now, ! believe Californians will look back with gratitude at the vision of this 
generation’s leaders, whose foresight resulted in their magnificent, efficient high speed rail 
system, le,ss congestion at roads and airports, and a healthier environment. 

We simply cannot afford to not build this vitally important infrastructure project. 

California’s transportation system is already overtaxed and our population will pass 
50 million by mid-century. 

Doing nothing would ultimately cost far more than building this essential system today. 

High speed rail is the only viable means of making sure our transportation infrastructure can 
meet our growing demand. 

Continuing to build more and more freeways and airports would be more expensive, more 
environmentally damaging, and less efficient for moving millions more Californians up and 
down the state. 

In fact, the non-partisan Legislative Analyst’s office has reported that the project would, and I 
am quoting “alleviate the need to build 3,000 miles of freeway, and five airport runways and 90 
new departure gates — at a cost of nearly $100 billion — that would otherwise be necessary to 
accommodate interstate travel by 2030." 

By saving $100 billion, the project pays for itself! 

To remove any doubt, just took at the spectacular success of high speed rail around the world. 

We have learned from places like Spain, France, China, Japan and many other countries that high 
speed rail is the most efficient and preferred mode of transportation between population centers 
100 to 500 miles apart. 

That is precisely the corridor California’s high speed rail will serve. 

High speed rail is working breathtakingly well everywhere else in the world. California needs its 
great benefits even more. 

As the 2008 ballot summary language pointed out, high speed rail will provide long-distance 
commuters with a safe, convenient, affordable, clean and reliable alternative to driving and to 
high gas prices. 

It will reduce traffic congestion on the state’s highways and at the state’s airports. 

It will reduce California’s dependence on foreign oil. 

It will reduce air pollution and global warming greenhouse gases. 



98 


Page 3 of 3 


It will provide fast, time-saving connections between California’s major population hubs. 

And it will bring all those thousands of good jobs to working families across the state. 

We cannot afford to fall further behind the rest of the world. Our state needs the economic, 
environmental, and quality-of-life benefits of a tliird mode of a clean, fast mass transit system to 
meet the needs of our children and grandchildren just as generations before us paid for and built 
the infrastructure that has supported today’s population and economy. 

Thank you very much. 



99 


^tate Pmlbutg anb Construction tCrabes Council 

ROBBIEHtATER Of (CillitOrilitl j.TOMBAO\ 

PRCSIBK-VT .^KCRfX.RV-TRfASVHM 

t^etablishcd I HO I 
Chanered by 

BUlU)INa AND CONSTRDCTIONTRADES 
DEPARTMENT 

m-cio 


Robbie Hunter. President. 

State Building and Construction Trades Council of California 


Question # 1 - How many members with the Building Trades are working on California 
High Speed Rail projects? 

Over 560 workers have been dispatched from various individual trades' hiring halls. 82% of all 
workers on the jobsite are from the Central Valley with the vast majority of work hours being 
performed by Valley residents. Some have completed the segment of work that they were hired 
to construct and around 500 are on site working at this time. 

Please see attached informational documents. 

Question # 2 - How many local Central Valley construction jobs have been created by this 
project? 

As stated above, 82% are Central Valley residents. All of these workers were dispatched from 
hiring halls based in the Central Valley and therefore the vast majority of workers would be from 
Fresno, Merced, and Tulare or other Central Valley communities. 

Question # 3 - Regarding those construction jobs created in the Central Valley, I 
mentioned at the hearing my concern that a person could be living in a hotel room or be a 
new temporary resident to the area using a local ZIP code, claiming to be "residents" of 
the Central Valley. What process are you taking to ensure these Central Valley 
construction jobs are actually residents of the Central Valley and not temporary 
residents? 

For a worker to be classified as a Central Valley resident, before they are dispatched from the 
hiring hall to a High Speed Rail job site, he must have a home address on his driver's license 
with the appropriate zip code to prove that he is a resident of the Central Valley, 


123t 1 .Street, Suite .302 ■ Sacramento, CA 95814-2933 ■ (916) 443-3302 • FAX (916) 443-8204 





100 


California High Speed Rail Authority 

Construction Padcage 1 Itesign-Build Project 


All Prevailing Wage Workers 
And Hours by County 
Total Number of Hours Worked 
Reporting Period 

Cumulative Totals up to June 30, 2016 


State - . . County Sum of Hours Worked SumofWdrVers 


mnnm 


1.277.00 

11 


Calaveras 

363.S0 

1 

ISEEmB 

SSSHHI 

397.50 

3 

HHHHI 


136.00 

1 

iHjlHIH 

gngffiiiSHii 


4 


Fresno 

130,732.90 

23? 




1 


Kings 

3.152.00 

2 

Idaho 

Kootenai 

2.540.CK3 

1 



4,509.55 

14 


Madera 

19.793.50 

41 


Marin 

210.00 

1 



2.409.50 

1 

IIHIIIIIIIIIIIII 

ISISnnHIIIH 

4.368.50 

11 

_ _ _ 

Orange 

1,936.12 

7 


Pierce 

139.CK) 

1 


SlISHHHi 

302,00 

3 



24.00 

1 


ESScEiSSSHlii 

1,854.50 

12 



26.50 

2 



1.990.25 

12 


SBESSSHH 

1,516,50 

1 



410.50 

8 


SSESSSHI 

2.127.00 

2 



166.00 

5 


Shasta 

147.50 

1 


Solano 

105.25 

2 



541,00 

1 



3.924,00 

18 


Sutter 

31.00 

1 


Tehama 

25.00 

1 


Tulare 

7,701,00 

18 


EiSlOu&SHB 

19.00 

1 



■■■■■■rsRn 

1 


Grand Total 

193.861.57 

■■HKSI 


National Targeted Hiring Initiative Workers Summary 
Total of Category One & Two and Disadvantaged Workers*^’’ 
Hours Worked Per County 
Reporting Period 

Cumulative Totals up to June 30, 2016 


Sfatte . ; County : Sum of Hours Worked . Sum of Workers 



OSSSHl^H 

1.277.00 

11 


SOSESHli 

363.50 

1 

CSSESHHB 

SSSHHIli 

397,50 

3 



136.00 

1 


SrinsSHli 

492.00 

4 


Fresno 

41,833.15 

84 


Kings 

2.976.00 

1 

Idaho 

CBSSEHHIi 

2.540.00 

1 



2.896.05 

11 


OSISHHIi 

11,374.50 

24 


Marin 

210.00 

1 


Merced 

606.00 

2 



1.936.12 

7 


Pierce 

139.00 

1 


Placer 

302.00 

3 



24.00 

1 



1,491.50 

9 


^ESSBSHli 

26.50 

2 



1.452.25 

4 



1,516.50 

1 



277.00 

6 



40.00 

1 



82.00 

3 


Solano 

105.25 

2 

R2SSISSSHI 

SISSEBBIH 

541.00 

1 



2.310.50 

11 


Sutter 

31,00 

1 


Q7R»|BBBII 

25.00 

1 


Tulare 

3,431.25 

8 



19.00 

1 


Yolo 

182.00 

1 



:--75&33;57 

v;:.; Vi, .2oa; 


Source Documents; CP 1 Certified Payroll Records (CPRs) submitted by TPZP, IV active and approved subcontractors regardless of tier. 


Plsdalmer; * "rite Information provided In this report is based from CPRs sent by TPZP, JV from the beginning of project work to June 30, 2016 for CP 1 Project, 
^ Ail Counties listed are located in California, unless stated otherwise. 


National Targeted Wor»w means an individual whose primary place of residence is within an Economically Disadvantaged Area (Category 1) or an EMremely Economically 
Disadvantaged Area (Category 2) In the United States, or a Disadvantaged Worker (see below). 

‘ Category 1 refers to workers who reside in economically disadvantaged area with zip codes that includes a cettsus tract or portion thereof in which median annual household 
Income is between $32,000 and $40,000 per year, 

^ Category 2 r efers to workers who reside In extremely economically disadvantaged area with zip codes that includes a census tract or portion thereof in which the median annual 
household income Is less than $32,000 per year. 

^ Disadvantaged worker means an individual who, prior to commerKing work on the project, resides In an Economically Disadvantaged area (Category 1) or Extremely Economically 
Disadvantaged area (Category 2), and faces at least one of the followir^ barriws to emptoyment being a veteran, being homeless, being custodial single parent, receiving public 
assistance, lacking a GED or high school diploma, having a criminal record or other invotvement with the criminal justice system, suffering from chronic unemployment, emancipated 
from foster care system, or being an apprentice with less than 15% of the am>rmticeshlp hours required to graduate to journey level in a program as described in Section 1.2. Note 
that a Disadvantaged Worker classification also entails that the worker resides in a Category lor Category 2 area, meaning they ore counted w/thm the two categories for employee 
count and craft hour reporting purposes. 




101 


California High Speed Rail Autiiority 

Construction Package 2-3 Design-feJlW Project 

All Prevailing Wage Workers 
And Hours by County 
Total Number of Hours Worked 


National Targeted Hiring Initiative Workers Summary 
Total of C^t^ory One & Two and Disadvantaged Workers*’'^'’’ 
Hours Worked Per County 


Reporting Period 

Cumulative Totals up to June 30, 2016 


Reporting Period 

Cumulative Totals up to June 30, 2016 


County, ; , 

Sum of HoursWorked 

SumbfWwker 

Alameda 

63.75 

3 

Calaveras 

110.S 

1 

Contra Costa 

21.5 

1 

El Dorado 

57.7S 

1 

Fresno 

5153.25 

44 

Kings 

3,5 

1 

Madera 

3524.5 

12 

Merced 

32.5 

1 

Placer 

56 

1 

San Bernardino 

28 

1 

San Joaquin 

86 

1 

San Luis Obispo 

53.5 

1 

Santa Barbara 

11 

1 

Santa Clara 

4,5 

1 

Solano 

1183 

8 

Stanislaus 

386 

4 

Grand Total 

i0r75.2S 

82 


Cdtaiftr'' 

Sum of Hours Worked 

Sum of Worker. 

Mameda 

8 

1 

Contra Costa 

21.5 

1 

Fresno 

3943.5 

33 

Kings 

3.5 

1 

Madera 

3516.5 

11 

Merced 

32.5 

1 

Placer 

56 

1 

San Bernardino 

28 

1 

San Joaquin 

36 

1 

Santa Barbara 

11 

1 

Solano 

719.5 

2 

Stanislaus 

386 

4 

Grand Total 

••• 8^12 



Source Oacuments; CP 2-3 Certified Payroll Records (CPRs) submitted by DfN active and approved subcontractors regardless of tier. 

Disclaimer; *The Information provided in this report is based from CPRs sent by OFJV from the beginning of project work to June 50, 2016 for CP-2-3 Project, 
” All Counties listed are located In California, unless stated otherwise. 


National Targeted Worker means an Individual whose primary place of residence is within an Economically Disadvantaged Area (Category 1) or an Extremely Economically 
Disadvantaged Area (Category 2) In the United States, or a Disadvantaged Worker (see below). 

' Category 1 refers to workers who reside In economically disadvantaged area with rip codes that includes a census tract or portion thereof in which median annual 
household income is between $32,000 and $40,000 per year. 

^ Category 2 r efers to workers who reside in extremely economically disadvantaged area with aip codes that includes a census tract or portion thereof if\ which the median 
annual household income is less than $32,000 per year. 


^ Di^jaduantaged worker means an individual who, prior to commencing wcwk on the project, resides in an Economicaify Disadvantaged area (Category 1) or Extremely 
Economically Disadvantaged area (Category 2), and faces at least one of the following barriers to employment: being a veteran, being homeless, being custodial single 
parent, receiving public assistance, lacking a GEO or high schcw! diploma, hawi% a criminal record or other involvement with the criminal justice system, suffering from 
chronic unemployment, emancipated from foster care system, or being an apprentice with less than 15% of the apprenticeship hours required to graduate to journey level in 
a program as described insertion 1.2. Note that a Disadvantaged Worker classifkatkinaho entails titat the worker resides in a Category lor Category 2 area, meaning they 
are counted within the two categories for employee count and craft hour reporting purposes. 




102 


California High-Speed Rail Authority 
Dispatched Workers 
Period Ending August 31 , 2016 

Construction Packaoe-1 Dispatched Worker Totals 


Total Number of Workers 470 

Total Labor Craft Hours To Date 203,217.37 

Total NTHI Hours To Date 141 ,760.50 

Total Disadvantage Hours To Date 49,564.00 

Journeymen hours 182,193.37 

Apprentice hours 21,024.00 


Construction Package 2-3 Dispatched Worker Totals 


Total Number of Workers 91 

Total Labor Craft Hours To Date 12,299.50 

Total NTH I Hours To Date 1 0,52 1 .75 

Total Disadvantage Hours To Date 

Journeymen hours 12,299.50 

Apprentice hours 


Disclaimer: Reports reflects all reported dispatched workers listed on certified payroll recors 
submitted by the prime contractors and received by the Authority as of August 30, 2016 


O